Many people nowadays or are in financial distress for a variety of reasons, from losing their jobs, pay cuts, to a craving for things of all kinds (DVD, TV, sports equipment, or hire-purchase). Finally, the repayment of old debts by new debts, where people fall into a debt trap, from which the difficult way back.
And so, some are solving the problem with a cash loan of money offered by advertisements in newspapers, magazines and television, and in which the Internet is full. “Money now, on hand and without confirmation of receipt or check of the bank register” headlines, trailers for people without funds. It is a very tempting temptation, if we get cash on hand at home in the living room, nobody asks us anything, but…
Before we decide on a cash loan
We should answer three questions. And if possible, so that we do not financially harm and sit on the lime to possible usurers:
Do we really need the thing we long for, or is it just the satisfaction of a sudden desire that will soon pass? Today’s world is built to HAVE, owes both the individual and the state, but we should live with what we have and not what we want. See practice case:
“There are people who get into debt because of alcohol, drugs, nightlife, others because of a sudden loss of standard, and suddenly there is nothing to pay a mortgage and a car. From my point of view, it was a coincidence of three circumstances: irresponsibility; a certain inability to look to the future, coupled with an extreme desire for certain things; sharp elbows, inexperience, respectively. abuse.
For example, irresponsibility was the reason that I paid over 40,000 dollars in finals to the Prague Public Transit Company.
The inability to plan life was reflected in CD purchases. The culmination was when I left my (in the 1990s) biggest Christmas reward of USD 10,000 in the CD store – a moment of joy was replaced by unpleasant uncertainty, the feeling that I had done something wrong… today I have over 1,000 original CDs at home.
Blurred elbows led to the fact that I work in the finals riding my own car that I was paying myself, and still suffered from the petrol mission because the limit fails me. I worked for eight years as a sports editor (cycling). This loyalty to my employer cost me about two-thirds of my net salary per month. A change of work followed. Real estate broker – it promised better profits. I bought a better car, but used again and the next day tow to the service. Repair for 30 thousand dollars – at that time I paid a mountain bike. ”
How much to borrow?
We should borrow as much as we can repay. Each of us has different standards, someone doesn’t even borrow because of the panic of the debt, another borrows happily from everyone who borrows it, and is convinced that it will still manage when one day comes to an end because it is in a debt trap.
The general principle is as follows: 25% of the net income of a family or individual should consist not only of repayments but also of other collateral for persons and property or savings. 75% is then left for consumption, such as housing, clothing, food, drugstore, telecommunications, transport, tuition, hobbies and holidays. If the 25% threshold is exceeded, this is becoming the first serious sign of future financial problems.
In general, we can say that we lack the so-called financial literacy, when our ancestors managed to keep with an ordinary pencil in hand and notebook home accounting, wrote down incomes and expenditures and guarded both the revenue and expenditure side very anxiously. It is astonishing that in times of powerful computers and accessible education to all strata of the population, we cannot manage family budgets.
Who do we borrow money from?
If we borrow cash from a bank that has a banking license of the Bank in Czech(without this license, the bank cannot do business in the Czech Republic) we have a guarantee of state supervision over the terms of the loan agreement, which implies that the terms are guaranteed in advance and are in banking market practices. It also means that interest rates are up to approximately 20% pa and in some banks, the loan can be repaid even without a penalty. Which banks provide this service for free and which are not shown in the tables below.
In March this year, the Chamber of Deputies passed the Consumer Credit Act. According to banks, this law should significantly eliminate the severe impact of usury on the ever-increasing indebtedness of Czech citizens, which is the current trend in society. Above all, this law should prevent the efforts of private entities to acquire the assets of people in distress through so-called quick loans for property.
Anyone who provides such loans will have to examine the creditworthiness of the client in the future, which is not common with some non-banking entities today. Conversely, many non-bank providers offer loans directly with speculation that the client will not be able to repay them and will subsequently heal on their assets.
The problem of usury loans is often not in their interest rate, but in the details that trap those clients who are unable to repay them and are subject to disproportionate penalties. In this respect, the new law, which will apply from 2011, is clearly beneficial. However, the real turning point in the fight against usury would be the subordination of non-bank lenders to the supervision of the Bank in Czech.
Under the new law, which is now going to the Senate, the Czech Trade Inspection Authority should continue to supervise non-bank lenders.