Monitoring of citizens' appeals on the protection of the rights of consumers of financial services, conducted by the Agency of the Republic of Kazakhstan for the regulation and development of the financial market in June 2020, showed that the largest part of the appeals - over 60% falls on the banking sector. That is, banks and organizations that carry out certain types of banking operations. These appeals are related, among other things, to the inability of individual borrowers to repay their loans, the demand for debt forgiveness, checking the terms of the bank loan agreement for compliance with the requirements of the legislation of the Republic of Kazakhstan.
Any loan is a serious matter, and it is necessary to take a loan with all responsibility in order to avoid trouble in the future.
So, three important points that a potential borrower should pay attention to before taking a loan.
1. Decide on a goal
Answer honestly to yourself the question: "Why are you going to take a loan?". A loan in general is a very convenient financial instrument, but you need to know how to use it correctly.
Banks issue loans for the purchase of housing, cars, consumer loans for other purchases. Loans are divided into non-targeted - when the bank issues a certain amount for various needs of the borrower, and targeted - with a clearly defined purpose: for the purchase or repair of housing, for education and more. Loans differ in the maximum loan amount, interest rate, terms and collateral. Banks can issue them both independently and together with partners - car dealers, construction companies, household appliances stores and other organizations. Therefore, decide which type of loan suits you best. This, of course, depends on what you plan to use the loan for.
And, of course, you should not take a loan in order to invest, for example, in dubious projects or organizations that promise high profits from cash investments. During the quarantine period, as a rule, financial scammers are activated, and you can easily get into the networks of a financial pyramid.
2. Assess your ability to pay
Suppose you have decided on the purpose of the loan, and it, in your opinion, is justified. The second step should be to assess your own financial condition and solvency. Answer the second question for yourself: “Will you be able to make payments on the loan if you suddenly get sick or lose your job?”. Count on a permanent source of income. You can't rely on the lottery or the promised bonus at work.
It is very important that the monthly payment on your loan obligations does not exceed 50% of your income. Only in this case you will be more or less confident in the future and timely repayment of the loan.
By the way, if you have made an informed decision about obtaining a loan, then before applying for it, you must definitely check your credit history. There were cases when borrowers became victims of financial scammers, and other people's loans were issued to them. Therefore, credit history should be checked periodically. You can get a personal credit report by contacting the State Credit Bureau and the First Credit Bureau, Kazpost offices, as well as through the egov.kz portal.
3. Study what banks offer
Study the bank loans market, monitor the websites of second-tier banks where you would like to get a loan. Find out about the terms of the loan, how much you can get, the amount of the monthly payment, the interest rate, how the loan is repaid, in what terms, are there any commissions when obtaining a loan, penalties for early repayment, how much the overpayment will be, is there a commission for cashing out.
Note that the law provides for the obligation of banks to disclose full information regarding the terms of the loan. So, before concluding a bank loan agreement, the bank is obliged to provide advice on the issues that have arisen for the client and the following information:
- the term for granting a bank loan;
- type of remuneration rate: fixed or floating, calculation procedure in case the remuneration rate is floating;
- the size of the annual effective interest rate (real value) as of the date of the client's request. The annual effective interest rate is the total amount of all payments made by the borrower under the loan agreement. The lower it is, the more profitable the loan.
- An exhaustive list and amounts of commissions, tariffs and other expenses associated with obtaining and servicing (repaying) a bank loan in favor of the bank;
- the term for making a decision on an application for the provision of banking services (if necessary, submitting an application);
- conditions for the provision of banking services and a list of necessary documents for concluding an agreement on the provision of banking services;
- information about the responsibility and possible risks of the client in case of non-fulfillment of obligations under the agreement on the provision of banking services;
- repayment method. The bank is obligated to offer: differentiated and annuity methods. In the first case, the principal debt is repaid evenly, but the amount of payments is in descending order, in the second case, the payments are the same, but the principal debt is repaid in ascending order. It should be noted that the choice of the repayment method is based not only on the desire of the borrower, since it depends on the parameters of the requested loan and the financial ability of the borrower to repay it monthly.
- at the request of the client - a draft agreement on the provision of banking services, etc.
In addition, from April 1, 2020, in order to familiarize and compare the conditions of a bank loan with the conditions of loans from different banks, the obligation of the bank to provide, before concluding an agreement with an individual receiving a loan not related to entrepreneurial activity, a memo for the borrower - an individual under the agreement a bank loan in the prescribed form, containing the main parameters of the loan, as well as preventing the consequences of default on the loan.
Pay attention to the convenience of the location of ATMs and terminals for future loan servicing - also an important criterion. And most importantly - always carefully read the bank agreement before you sign it!
Another point that is currently relevant is not to take a loan unnecessarily during a pandemic and increased quarantine measures. Even in calm times, not all borrowers manage to close their debts to a credit institution. During a crisis, the situation gets worse. Even if at the moment there is a stable income, events may not develop at all in your favor.
So, when making a decision to get a loan from a bank, you need to be, firstly, selective, and secondly, rational. After all, life without a loan is still better than with it. To do this, improve your financial literacy with the Fingramota.kz project, study
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