There are many methods of obtaining cash. Along with the increase in the consumption lifestyle, there are no clearly perceptible increases in earnings. There are more and more opportunities to spend money, as well as bills and other monthly obligations. It should not be surprising, therefore, that almost every second adult citizen of our country repays liabilities in the form of a loan. What are the pros and cons of borrowing?
Loans – positive aspects of borrowing
One would like to say: take or not take – that is the question! It is very important who we borrow money from. Loans among loved ones are quite popular. On average, Poles borrow between 250 and 450 USD annually 1. These are not large amounts. Larger loans, even from close relatives, require reporting to the tax office and tax deduction. Increasingly, loan companies are encouraging to take out loans. Bank loans require additional action from a consumer who prefers quick non-bank loans. Especially since there are at least a few reasons for this.
- Costs. Loan costs have been significantly reduced in recent years. While the average real interest rate on cash loans has fluctuated in recent years at 15-16% per annum, there are more and more offers for free loans on the non-bank loans market.
- Availability. The convenience of borrowing due to the possibility of borrowing online has meant that even in the event of a temporary loss of liquidity or an occasional purchase offer, you can quickly get the money you need.
- Formalities. The lack of time-consuming formalities and enforcing additional actions makes borrowing easy and, above all, quick. Filling out the loan application takes a while, and the decision and money can be transferred even in a quarter of an hour.
With the entry into force of the provisions of the Anti-usury Act, loan companies’ offers have become more transparent and legible even to an untrained consumer. Borrowing money from a family is associated with some discomfort, admission of financial problems or revealing the idea of buying. Loans from loan companies guarantee discretion. What’s more, in home conditions you can get acquainted with the cost of the loan, the content of the documents, so that the final decision can be made with greater awareness than that in a bank branch, when the employee signs the ready content for signature and there is not enough time and sufficient focus to read all the records.
Loans – disadvantages and threats
Each loan has some disadvantages, this from family and friends, including non-bank one. Common reasons to complain about consumers result from the phenomenon of so-called missellingu. This term refers to the inadequacy of the offer to the needs of the consumer. This may result from the imposition of the offer by the lender, but also from the hasty acceptance by the borrower. The risk of borrowing is associated not only with inaccurate familiarity with the offer, but also with the hasty choice of the loan company. Consumers rarely check who the actual borrower is and whether it is a legally operating entity. As a result, they are exposed to unexpected costs. Finally, tempting loan ads arouse a desire to take on more, which can lead to serious trouble and a spiral of debt.