Consumer credit is quite a wide term. In this article we will try to consider the dangers of the main types of consumer credit:
Consumer credit for acquisition of household appliances: computers, washing machines, refrigerators, furniture, office equipment, etc.
Consumer cash loan to use various services: maintenance, education, medical, travel, etc.
A cash loan without pledge.At once we will note, the autocredit, the credit for business and a mortgage here, we will not consider. So, let’s begin.
World statistics and popularity of consumer loans.According to statistics, today about 80% of people worldwide at least once were associated with consumer loans. Someone bought on credit the phone, the TV, someone is paid off at the petrol station or the store credit card, etc.
Advantages of consumer loans and customer support.
Considering the dangers and disadvantages of consumer loans, in all fairness and their benefits. People can afford almost any thing at any time, even when he is in a difficult financial position. Credit always gives some advantage to people, but just may not be favorable from a financial point of view, as always has any interest. Of course, if you took out a loan and paid it in full + money earned is profitable. However, from a formal point of view, you have given still more.
Any banks and credit institutions are encouraging their loyal customers by providing:
Lower interest rates.
Flexible repayment terms.
The increase in credit limit.
Fast processing of loan application.
All kinds of discounts in shops and stocks.
Minimum contributions and overpayments, etc.
The dangers of consumer credit and basic problems of consumers.
Now directly on main. Probably everyone has seen the ads for “0% APR”? After all, everyone wants to use this service? Actually the consumer credits are the most dangerous for borrowers. The modern credit system is built on:
The propensity of almost all people to impulsive decisions.
The inability of people to manage your money.
Sadly, however, the people in the truest sense of the word become slaves to creditors is the main danger! It implies:
Too high interest rates on consumer loans. The percentage can sometimes reach 80-100%. People are easily able to buy several washing machines or televisions, for example.
Shopping. Typically, this process is uncontrollable and leads to a huge increase in debt.
False improvement in the financial situation, stability and status in society. Why not go to an expensive restaurant in a loan, for example?
Incorrect calculations of their capacity to repay the loan.
Taking another loan to repay the previous time. This only exacerbates the situation.
Stress, depression, aggression, pettiness, etc.
The propensity to crime.
Deterioration of credit history with late payments, as well as additional penalties and interest.
Scary? Actually no. After reading this article, you can come to the following conclusion:
It is always better to shop on the accumulated money.
Do not get behind on monthly payments.
If you follow all the requirements of lenders, read the contract carefully, skillfully manage your money and assess their capabilities, consumer credit is absolutely not dangerous! The danger lies in the people themselves.