Citizens of Serbia mostly use cash loans for unplanned expenses, travel, apartment renovation and similar expenses, Erste Bank announced today.
It was pointed out that this type of loan can be of great help if the offer is carefully chosen and the money is carefully disposed of.
In the first place, it is important to reconsider the possibilities before borrowing, calculate the approximate amount of the installment and whether there is enough money left after deduction for other living expenses. Experts advise clients not to complain about the amount or the loan repayment period, ie to take as much money as needed and calculate the optimal repayment period.
“For smaller amounts, the best solution is a short.term cash loan for 12 months. It is not wise to borrow for five or more years for summer vacations just because the installment is smaller, unless you intend to give up travel for a while,” Erste Bank states.
The recommendation to citizens who intend to borrow is to pay attention to the accompanying costs such as loan processing fees, annual loan monitoring fees, insurance, as well as the type of interest rate.
Most people prefer loans with a fixed interest rate because in the case of a variable interest rate there is a potentially higher dose of uncertainty about the amount of the installment.
Lower interest rates affected the growth of household and corporate borrowing in the second quarter of this year, according to data from the National Bank of Serbia. In that period, loans to households increased by almost 45 billion dinars or 3.6 percent, and the largest part of new loans were cash loans – 56.6 percent.
The average nominal interest rate on dinar loans of 8.7 percent is unchanged compared to the first quarter, but it is significantly lower compared to the period from eight to ten years ago, when it was over 20 percent.
According to Erste Bank, in the last six months, clients who opt for a cash loan borrow about 438,000 dinars on average, with an average repayment period of 55 months. If we look at the cash loan with refinancing, the average amount is 579,000 dinars, while the average repayment period is 70 months.
In the category of cash and refinancing loans, the share of refinancing loans is about 51 percent, and cash 49 percent.
Erste Bank estimates that when taking a refinancing loan, clients borrow an average of around 200,000 dinars in additional cash, which they usually spend on current living needs.
“In the process of raising a loan, we consider the advisory approach very important and we are turning to it more and more, in order to help clients make the best financial decisions for them. wintering, tuition or equipment for the beginning of the new school year, as well as for the purchase of used cars, firewood and winter clothes “, states Erste Bank.
When it comes to cash loans, this type of loan does not require a deposit and there are no restrictions on what the money will be spent on. At Erste Bank, loan amounts of 50,000 to 3,500,000 dinars are available to citizens, depending on their creditworthiness and the amount of regular monthly income, with an effective interest rate of 6.9 percent for applying online, which is significantly lower than the average interest rate. for dinar cash loans, which amounts to 9.4 percent.