The period of low-interest rates lasting despite the accelerating inflation in 2019 changed the perception of credit among average consumers.
The loan turned out to be a cheap supplement to consumer needs. But where are the more and more common problems with paying off liabilities and how can you counteract them so as not to worsen your creditworthiness?
Debt repayment issues
The problem with liabilities is primarily due to the revaluation of creditworthiness. It may happen that you take out a loan, and suddenly you face degradation of position or a change in the standard of the contract. The main problem of borrowers in Poland resulting from most industry reports is cyclical financial problems.
The reason for cyclical financial problems is unexpected expenses in the home budget focused on treatment, urgent renovation. Added to this is the easy availability of credit, even in supermarkets, non-bank institutions operating on the Internet, seasonally in banks.
Legal income at the minimum wage level entitles you to take not only one cash loan, no collateral, no guarantee, without the consent of your spouse, and even without setting up a separate account at a bank branch.
Other reasons for problems with loan repayment are the complete lack of expenditure planning after signing the loan agreement, loss of employment, change of employment relationship, just too low income but giving positive creditworthiness. The structure of liabilities in Poland is most often divided into 1 debt, an average of 2, and a maximum of 8 and more, but these are households in a real spiral of debt.
Many debts at the same time, is it always a problem?
It is best not to allow more than one debt to arise at the same time. However, if you find yourself in a similar situation, apply for consolidation and not necessarily in the bank where you have liabilities, but in the institution as cheap as possible, with credit holidays, without great requirements for securing the contract.
In Poland, a larger loan for repayment over a year is presented as a luxury good. Few people have real creditworthiness to sign a contract with a bank. Alternative sources of debt are non-bank institutions, employers’ families, pawnshops awaiting the transfer of property pledge, usually quite valuable.
Maintaining positive creditworthiness
Problems with debt repayment can be solved by knowledge of restructuring techniques and law, in particular the Consumer Credit Act, which clearly explains the limits in determining non-interest costs. Banks and parabanks no longer impose higher costs for consumers.
Quick credit repair and debt consolidation are an opportunity to get out of financial problems unscathed by creditworthiness. This is most important if you plan to use the potential of cash loans in the future.