In lending, as in other financial areas, there are negative sides. Bonded lending - the practice of issuing loans using an extremely high interest rate. Methods of bonded lending include direct deception of borrowers, aggressive sales methods, the use of borrowers' ignorance in financial matters, complicated contract terms and others. In some countries, bonded lending is prohibited by law. In others, it is condemned, and extensive explanatory work is being done to prevent damage to borrowers. For a product or service that was received today, not tomorrow, you need to overpay. Moreover, the amount of overpayment can be twice as much. All "thanks" to the high interest rate.
One of the negative aspects of lending is overpayment. Some types of loans will require down payments, which can be a considerable amount. An unpleasant factor in lending is the down payment. Very often, to get a loan, the borrower must provide a certificate of income. Revenues should be high official, and it is also necessary to collect a whole package of documents for the bank. To obtain a loan, you must provide an income statement. Any loan of money entails certain psychological moments. The lender, one way or another, feels certain emotional distress associated with credit obligations. The unpleasant side of lending is experiencing. If you constantly pay out of time, the amount of overpayment on the loan, which we discussed in the first paragraph, is significantly increased. As a result, the purchased product will cost you 2 - 3 times more than its real value.
If it is impossible to pay the monthly payment on time, from the next day after the scheduled payment a penalty begins to accrue: the minimum is 0.1% for each day of the loan debt, the maximum depends only on the “immodest” bank requests. In case of late payment, nobody canceled the daily interest calculation, and your scheduled payment, which was not paid on time, continues to “drip” in the interest rate. At the same time, some banks charge, in addition to penalties, an “additional” interest rate, which may be twice as high as the base rate. Having taken a loan, you are surely confident in its return. However, one should not forget that life is a changeable thing. And unforeseen situations can happen to each of us.
From circumstances such as loss of work or a reduction in wages (as it was during the crisis), an urgent unplanned operation, or the death of loved ones (when all the funds go there, and not before the repayment of loans) - no one is insured. Can you be one hundred percent sure that it will pass you at least for the loan repayment period? If not - do not take it.