The most popular service commercial banks are consumer loans to private individuals. No wonder, because this type of credit can bring a good income to our country’s financial institutions. This is due to significant interest rates. Taking commission and interest into account, the consumer pays around 40% of the loan volume for the year.
Consumer credit for individuals: some features
Market – individuals, contract workers. The loan is only granted to permanent employees. The loan amount depends on the amount of the latter’s salary. In practice, even if the bank’s advertisement says that theoretically a substantial amount of cash is available, the loan will only be calculated based on your income. Basically, the maximum loan amount is about three wages. If the payer fulfills his obligations on time, the bank can raise the limit to six borrowers’ average monthly wages.
Interest rate for consumer loans Individuals significantly higher than other credit products. This is due to high credit risks: in fact, this type of loan is not secured by collateral. In addition, there is always a risk of a person being fired from work and resulting in late payments. Such a concept as low consumer credit is a marketing trick used by financial companies. With low interest rates, this is unprofitable for the bank.
It is advisable to choose a creditor bank well. Read the terms of the loan. There are cases when you can only hear one interest rate in advertising. In fact, however, there are still monthly commissions, insurance, etc.
Does the bank check the borrower when granting a loan?
Every bank is reinsured and tries to reduce its risks. The bank therefore carries out a comprehensive check when borrowers request that private loans be granted to private individuals.
The borrower is first checked by the office. Credit history (CII). If you have already taken out a loan, the CII will provide information on its repayment to the bank on request and form your rating. This information determines the bank’s further decision to legend to a potential borrower.
Each bank has a different approach to credit history: some have used information from the past two years, others five years.
Regardless, I want to mention the consumer credit without proof of income. The amount of such loans is much lower than that of references, and the interest rates are much higher. The use of such a loan is therefore only recommended in extreme cases.
Moments that need to be considered as potential borrowers
- Before you take out a loan, you need to think carefully about this moment. Do not take it without special need.
- Make sure that the loan payment is convenient and does not exceed 25% of your net income. In this case, the borrower has free money that is intended for other purposes.
- It is not necessary to take a loan “to the eyeballs” as changing your salary downwards will result in overdue loans.
- Keep an eye on your credit history because anything can happen in life. So watch out for the future.