When is the best time for short-term loans?

According to surveys, 48% of Czech citizens or their household have a loan. 25% are mortgages and 2% are business loans.

Loans have a short-term nature

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However, over the last two years, loans have a short-term nature. 25% of people have a loan for goods, an increase of 5% since 2014, and 19% own another loan, an increase of 7%. So what do Czechs spend most of their short-term loans on?

The approach to life on debt has changed in recent years. Already 85% of people consider loans to be a natural part of life. However, it should be noted that 87% of people are aware of the risks that a loan can bring.

Most accepted are loans for housing or business loans

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The most accepted are loans for housing or business loans. 62% of Czechs consider loans for goods to be normal. On the contrary, Czechs consider loans for holidays or Christmas, where more than three-quarters of the population disagree with such loans. Almost 33% of all loans go to the purchase of television, computers or other electronics and 25% of loans go to the purchase of appliances or other household items.

Therefore, people use short-term loans primarily for the purchase of electronics and for the normal operation of households, furniture, household appliances, etc. When purchasing furniture, they prefer loans from the bank and loans from non-banking companies predominate for the purchase of appliances.

Wedge-wedge

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However, it is also not uncommon for people to borrow money to repay another loan. This is so-called wedge-wedge and we cannot recommend it. If you do not have to repay your current loan, you will probably not even have to repay the new one, where the monthly amount will be even higher and you will get into an increasingly deep debt trap.

Every fair company will be happy to arrange a payment schedule with you. A fair lender should not even give you another loan if you are already in debt problems. For example, Little Em’ly states on its website Little Em’ly that it verifies the creditworthiness of the client.

Increase in the debt of seniors

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In recent years, however, there has been another nuisance than just vacation loans or repayment of current debts. Indeed, there is an increase in the debt of seniors, who in most cases want to please their children or grandchildren and because they do not have enough money, they often resort to short-term loans. In 2014, people over 55 borrowed around USD 72 billion.

The main problem is that it is very difficult for those receiving an old-age pension to increase their income. If they do not have the money to buy a gift for their grandchild, they will probably not even have to repay the loan.

Repay your obligations

Repay your obligations

So if you are thinking about a short-term loan or loan, be sure that you will be able to repay your obligations. The next important step is to think whether you really need what you want to borrow.

As already mentioned, vacation is usually not the best reason for applying for a loan. If you do not have enough money for it, choose a cheaper option.

A previous loan is also not an ideal solution. If you know that you are able to repay and that you really need the thing, then you only have to find the right provider.

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