Perfection of Getting the Right Credit
By their very nature, loans are not something bad and scary. But to get the most out of their benefits, you need to know how they work. In our quest to be useful, we have prepared a series of articles on the subject. They will help you make your informed and sensible choices. Today we will introduce you to the most popular credit consumer credit with กู้เงินนอกระบบ .
What The Consumer Loan Is
For purely historical reasons, the Bulgarian terminology on the subject is a bit confusing. If you need to know more about the different definitions, read this article.
The short explanation is the following: 57% of all loans to individuals in Bulgaria are consumer loans, with “our” credit heading the ranking, followed by the fifth of the mortgage loan (42% of the market). Far behind them, with only 1% of the market, are leasing companies.
Consumer credit, in turn, is divided into 3 subcategories:
In this article, we will focus on monetary credit. It is used to finance a variety of needs – home renovation, car purchase, significant family occasions (wedding, birth), travel, unforeseen expenses and more.
You can get cash from both a bank and other financial institutions, such as a quick loan company. However, keep in mind that although these are the same product, the amount of credit, repayment terms, interest rates and fees can vary enormously.
The amount of the cash loan depends on where you get it from. The minimum amount is $ 50 (for some payday loan companies), with most banking institutions it is $ 500. The average amount for a cash loan is $ 10,000 and the largest is $ 50,000 (70,000 for customers who are very unlikely to default).
For banks, the repayment period of the loan varies between 6 months and 10 years, while for so-called “payday loans” it can be only 5 days. It is important to note that payday loan companies “offset” short deadlines with very high fees.
One of the main distinguishing features of cash loans is that they are almost never required to make a pledge. This makes the application process much easier, faster and simpler, which is one of the main reasons for their great popularity.
How No Security Is Required
As mentioned before, in order to receive a cash loan, you do not need to mortgage property or provide collateral. Financial institutions do not have a physical entity to guarantee that they will receive their money back. Therefore, they have developed a system to evaluate the reliability of the borrowers.
This system is simple but very effective – financial institutions can easily check all the information available to you (credit history, financial position) and calculate your credit rating. It is a specific number that shows how likely you are to repay your loan. It depends on the price you will pay for the loan.
In some cases, financial institutions require the presence of a guarantor – a person who guarantees the repayment of the loan and shares the responsibility for it. In this case, it can be assumed that the credit is for two people, which is why the credit rating of not only the applicant but also that of his guarantor is checked. With this procedure, the financial institution doubles the chance of receiving its money back. Therefore, it tends to put a lower price (interest and fees) on the loan.