Loans, which are the most important; insidious

The use of credit should only take place when you are sure you can meet the conditions for repayment of the loan, without exposing yourself on the one hand to the risk of not being able to sustain the installments and on the other to get into the habit of supporting our consumption with continuous loans which, at some point, risk forming a veritable chasm in our accounts.

In fact it would always be better to buy only what we can afford with the finances we have at the moment and set aside the rest, but in practice it can be possible to force us to buy something, for example a machine to work, without having to moment adequate financial resources. If you really have to resort to this occurrence, it is better to know in advance that not all loans are the same and that some of them have greater pitfalls than others.

Consumer credit

Consumer credit

The first form indicted in this sense is the so-called consumer credit, an increasingly used form of financing, which however risks long play to turn into a real ball and chain for the accounts of entire families. Before using it, it would be better to ask if the product we want to buy is really fundamental to satisfy our needs or to evaluate if maybe we would not have to postpone the purchase, maybe at a more propitious moment.

Moreover it would be better not to ask for more loans at the same time, thus avoiding that the deadlines for payments can overlap and form a mass of money impossible to repay. Experts indicate the threshold beyond which a family should not go in relation to the total available income, beyond which the risk rises exponentially.

In this context, the now famous, in some respects notorious, revolving cards, increasingly used not only for the purchase of durable goods such as appliances, furniture, computers, tablets and anything else deserve to be discussed. for needs related to small daily expenses. In our country, more and more households are making this choice, thinking they can cope with the comfortable installments envisaged by advertisements that are often unclear or even misleading. In the event of delays or non-fulfillment, however, interest reaches the threshold of the usury rate.

Their diffusion has also been facilitated by the fact that credit institutions adopt much larger mesh than normal loans, for which it becomes necessary to demonstrate the possibility of paying the installments. In the vast majority of cases, in fact, a simple signature is enough to see the credit card arrive directly at home and without additional costs, at least in appearance.

The card does not provide for time limits nor the obligation to present new documents attesting to the real position of the holder, where the same has changed in the meantime. Another insidious element is the possibility given to the cardholder to decide the amount of the installment, a circumstance that easily generates the illusion of such a limited amount that it does not significantly affect the family budget. In reality, however, the cost of interest is extremely high, so as to reach rates between 19% and 25%, which increase considerably in the event of late payment.

Mini loans

Mini loans

Another form of credit that can be extremely dangerous is that of mini loans. It is a product that is taking place in many countries, including ours, representing the financing of the last resort, which would absolutely not recommend using them. In practice, the target bank grants fairly small amounts, which can be repaid in installments that may seem quite comfortable, over a period of time that usually varies from one to two years.

However, if it is not possible to meet the payment deadlines, the interests start to increase very quickly, soon constituting a mass not only complicated to repay, but also such as to eventually regret having chosen this form of credit. Precisely for this reason, insiders advise using mini loans only if all other alternative routes are blocked.

Finally, debt consolidation, another financial product that should be avoided. If in fact in theory it would make it possible to unify all the financings obtained in a single cauldron that allows to extend the repayment deadlines in a longer period of time, in practice its appeal is purely of facade.

To understand why, it would be enough to make a quick calculation concerning the share of interest that must actually be paid and compared to the time over which the installments are spread. As a result of debt consolidation, a longer payment period is expected, but with a figure that expands to make the final balance not very convenient.