Demand for payday loans is high, with new disbursements increasing by 50 percent this year, exceeding home loan growth by more than 30 percent. However, there are several things to keep in mind when applying, or borrowing can be frustrating in the future. Goodbank collected the five pitfalls that most often made life difficult for borrowers this year.
The retail credit market, including mortgage loans and payday loans, played a key role this year . For the former, the amount of new contracts reached HUF 720 billion in the first 10 months of the year, representing an annual increase of 35 percent. payday loans grew at an even faster pace of 50 percent, equivalent to a new placement of HUF 383 billion. Goodbank has helped thousands of borrowers with borrowing this year, and based on these, they have compiled the five key points that they need to consider in order to avoid future problems.
How much is needed?
It is often the case that borrowers do not take into account the additional costs, thus underestimating the loan amount. For example, renovation after a home purchase doesn’t always have the money left. As you may, renovation costs increase as you work.
There was also an example where someone repaid the purchase price of the apartment from a payday loan but did not calculate the tax.
How much can you fit in?
Before applying for a loan, it’s a good idea to balance your monthly income and expenses. In addition, unexpected costs must be taken into account and the amount of the loan and the monthly repayment determined. That is, so that in case of extra issuance it should not be a problem to repay the loan .
A loan expert at Goodbank mentioned that there is already a legal limit that up to 50 per cent of net income, 60 per cent of monthly income of 400 thousand forints can go for loan repayment, but it is not a good solution it is better to pull the ceiling.
One offer is not enough!
According to Goodbank , relatively many people are already jumping to the first offer or the construction offered by their own bank, although in most cases there are more favorable offers. In particular, because of the demand for payday loans, competition between banks is intensifying, so that more favorable arrangements may come from day to day.
For example, Goodbank calculates that, in mid-December, the most favorable one-year 1.5 million HUF fixed-term payday loans remain below HUF 30,000 a month, while the most expensive ones can have a monthly account of more than HUF 40,000.