Many believe that any loan is a kind of slavery and that supposedly today “credit slavery” has changed to the “slavery” of microcredits.
According to statistics, many people, thanks to various loans, have fallen into the “debt trap”. They took several thousand for current needs and were in debt. But I would like to immediately clarify, as a rule, those people who take loans mindlessly, considering that quick money is a way to live for your pleasure. Far from it, microloans are a way to solve their small financial difficulties, and not the ability to quickly get money.
Fast money: What is the catch of microloans?
Signs like “Money in 5 minutes” can be seen in any city very often. And many fall upon them. Some are stupid, but for others they become almost the last lifeline.
The term “microcredit” has been heard by many. But not all people understand that microcredit and instant credit are two different things. No, of course there is a similarity, but it is insignificant – the speed of the loan. And that’s all. They promise to help in advertising not only with money, but to do everything quickly and at the same time require a minimum of documents. However, if you delve into the essence of such proposals, you can see all sorts of “but.”
The fact that bank lending froze, the market responded quickly. The number of microfinance organizations (MFIs) has increased dramatically. The number of microloans issued increases, while consumer loans decrease. And where else to turn to the ordinary citizen? And the promised 1% -2% per day seem a trifle. Few people realize that this is 365-730% per annum, and if with fines for delay, then the percentage is simply predatory.
Of course, the goal of microcredit is to help a person solve his immediate problems for a short time. Such a huge percentage is due to the fact that microcredit is issued to everyone with a passport and what is interesting is practically disregarding the borrower’s credit history.
Danger of microcredit
If the advantages of microcredit can be listed on the fingers of one hand, then the disadvantages are much greater. Astronomical interest, limitation in the amount of the loan and the loan term, large penalties, the probability of falling into the hands of fraudsters – this is only the tip of the iceberg. It would seem such a simple operation, and conceals such a danger.
1. The first danger is that some (usually unknown) companies that offer such loans, in fact, are fraudsters. The first sign of this is the obligation to pledge to the creditor various documents, valuable property, and sometimes even a passport.
2. The second danger, as mentioned above, is the high cost of living. To take a loan from an MFI, you need to be sure that you can pay it off in time. Although such organizations are counting on the classics of the genre: I took it – I did not manage to give it on time – I was in debt. With such a huge percentage, “penalty” and penalty, a week of delay is fatal for the borrower. And if with a bank it is possible to resolve an issue regarding restructuring or a credit vacation, then the MFI does not provide this. But the collectors of such offices are taken as in the selection. There are no clear laws that could regulate this field of activity, so who does what he wants, he does. Although the existing law obliges to clearly state in the contract all the conditions for the provision, some organizations, to put it mildly, are cunning.
Before you take a micro loan, we invite you to get acquainted with reviews of microloans , which will help you learn more about the company in which you decided to receive money.
Note that many MFIs give quick money only after inspecting the borrower’s housing – to make sure that they are paying and to confirm the actual place of residence of the client.
In many developed countries, the number of MFIs is limited, in some states of America it is completely prohibited, because such organizations exacerbate the already poor situation of the borrower.
Some people mistakenly believe that it is not necessary to return a small amount of money. But it is not. As in any bank loan, the money must be returned. Because the organization that gave them to you can go to court, win the case and come for property.
If it so happened that you had to take money in the MFI, you need to try to follow all the rules, to repay the debt on time or at least in parts.
What are dangerous loans in microfinance organizations?
Today, many Russians, faced with a shortage of funds, are turning to microfinance institutions (MFIs). These modern moneylenders offer “easy and fast” money at high interest rates. And they give out loans to literally everyone – both to the student, and to the pensioner, and to the unemployed. Klops.Ru figured out what is fraught with appeal to the MFI.
What loans are
Microfinance organizations have proliferated in Russian cities like mushrooms after rain. Today they give out to individuals both consumer loans, and microloans “before pay”. The first ones are usually given for a period of up to six months, but they can also be issued for a period of up to two years. Most often, such a loan is taken to purchase large household appliances, urgent car or housing repairs, medical treatment, tourism, etc. explain in the Central Bank .
Microloans “to paycheck” are issued for personal needs for a very short period of time – from seven days to a month. Such loans are taken in case of urgent and unforeseen expenses or salary delays. The interest on them is higher than on consumer loans and on credit cards.
The advantage of “fast money” – the speed and ease of registration. Most often, the borrower will only require a passport, in rare cases – the second document proving the identity.
“It makes sense to take such a loan only if you are sure that you can give it back for sure, and also that the benefit from its use will outweigh the costs incurred,” the Central Bank notes.
Where does the draconian percentage come from
MFIs, advertising their services, promise to “help in any life situation.” The decision to issue a loan will be made in a minute (!), And the money will be transferred to a bank card, by transfer or will be given in cash. But there is a fat minus – a very high interest rate – up to 2% per day.
“The MFI is where citizens shouldn’t need to go for anything,” says sociologist Anna Alimpieva. – But there are a lot of them, including in Kaliningrad. In large cities, each metro for several pieces. They are in demand because the crisis, people get poorer faster, and advertising is actively. This is crazy, of course. There is a predatory percentage. They set the interest per day, and if you multiply it by 365 days, you get up to 600-800% per annum.
“Microfinance organizations conclude loan agreements with individuals without even checking their solvency, therefore, according to these contracts, a very large percentage of non-repayment,” noted Finpotrebsoyuz, a public organization for the protection of consumers of financial services . – This percentage of non-return by the MFI is included in the interest rate. However, it is not controlled by anyone, and a particular organization determines the maximum interest rate on its own.
It turns out that two bona fide borrowers pay for eight “bad” ones who will not return the money. By issuing loans under the “draconian” interest, organizations insure themselves against unscrupulous borrowers. The risk of non-return in MFIs is huge – up to 70% of the portfolio, the head of the Main Directorate of Microfinance and the Bank of Russia Financial Availability Methodology, Mikhail Mamuta, said in an interview with Moskovsky Komsomolets .
According to him, despite the huge interest rates, 2.7 million Russians use the services of MFIs. About 3.5 thousand companies operate on the market, and the size of the consolidated portfolio is almost 63 billion rubles.
Law against credit bondage
– Microfinanceists themselves explain their predatory interest by saying that people allegedly take such loans for a short period of time. So overpayment for them is insignificant. In fact, this statement is erroneous, – said Dmitry Yanin, Chairman of the Board of the International Confederation of Consumer Societies (KonfOP) on the organization’s website. – For such loans are often not very wealthy borrowers. They can not return the money on time. For this reason , rather large fines and penalties are subsequently added to the amount of debt .In his opinion, such “easy” money can lead to long-term credit bondage, it will be very difficult to get off the hook – the amount of debt will grow like a snowball.
Today, interest rates are regulated by the law “On Consumer Credit”. Information about their size should be disclosed and subject to strict control by the Central Bank, said Mamut. Now the Central Bank requires the MFI to form reserves for “bad debts”. If the debt exceeds 180 days, then the reserve should be 100%.
– That is, the MFI owner is given a signal: if he has a bad portfolio, a high delay, then he must replenish capital all the time. Otherwise, the MFI will no longer comply with regulations and will be withdrawn from the market. In fact, the Central Bank says: either reduce the risk, that is, treat the assessment of the borrower qualitatively, or do not engage in this business at all, – said the representative of the Central Bank.
But so far, the transparency and security of the microcredit market is far. According to Mamuty, the main effect of the Central Bank is expected from the updated law “On microfinance activity and microfinance organization”, which was adopted in a new edition at the end of December 2015. It will take effect in two months.
– Introduced a unique limit on the maximum amount of debt on interest to the “body” of the debt. Suppose a person took 5 thousand rubles for three days at 1.5-2% per day, but could not get the money back in time and he started to accumulate overdue money, Mamuta says. – Theoretically, it can grow to infinity. Therefore, we have introduced a restriction according to which the total amount of debt on interest cannot exceed the principal amount of debt by 4 times. If a person took, for example, 3 thousand rubles and could not repay the loan on time, then the delay may increase to a maximum of 12 thousand and stop. Further accrual of interest does not go.
In his opinion, this restriction will be a challenge for 30-50% of companies, but a significant part will cope with it. And in the future, the Central Bank intends to reduce the level of restriction to double. But this requires time and market adaptation to new conditions. In most countries of the world, this limiter is in the range from 1 to 2.
To take or not to take?
Today, many experts recommend not taking loans from MFIs. According to Yanin, as long as there are no restrictions on the microfinance market, it is better not to contact these organizations. If you have already become an MFI borrower, in no case do you need to refinance in similar structures in order to cover existing debts with the help of a new loan, the head of KonFLP notes. But if the situation is hopeless, then you need to apply for a microloan, having weighed all the risks.- Before concluding an agreement for a microloan in an MFI, compare it with a consumer loan from a bank. A simple consumer loan at a bank will cost ten times less than a loan to an MFI, ”said Yulia Kolesnikova, a representative of the Rospotrebnadzor department in the Kaliningrad region. – It is necessary to carefully read the rules for the provision of microloans, approved by the MFI, to pay attention to the information on all payments related to the receipt, maintenance and return of the microloan, as well as for what period interest is calculated.
First, make sure the organization works legally. It should be included in the State Register of MFIs of the Central Bank of Russia. You can check it on the official website of the Central Bank (cbr.ru).
The MFI office must provide you with a registration certificate or a copy of it.
In any case, do not rush to design. By law, each MFI is required to disclose the full cost of the loan, that is, the percentage of overpayment for using money. Therefore, it would not be amiss to visit several organizations and compare the conditions.
The Central Bank notes: the MFI must give you time to think. You can enter into a loan agreement on the specified conditions within five days after contacting the organization’s office for a loan.
If an MFI is a member of one of the self-regulatory organizations (SROs), this is an additional guarantee of the good faith of the company. Information about this, as a rule, is posted on the company’s website, emphasize in the Central Bank.
Before you take a loan, plan to repay it, choose a convenient date – for example, 3-4 days after the salary.
– If you pay several loans or loans at once, plan payments on them in different parts of the month in order to distribute the debt load between the advance and the salary, – advised the Central Bank.
And most importantly: do not take a micro loan if you are not sure that you can pay on time! If you suddenly realize that you cannot make a payment, immediately notify the MFI. If the reason is valid – loss of work, illness, long business trip, etc. – The lender can provide a deferment or offer debt restructuring.
You can return the loan ahead of time, with interest paid only for the actual period of use of money. Always take a certificate of full repayment of debt – this document will be useful in case of disputes.
It is possible to resolve the disputes arising in the pretrial order by sending a complaint to the MFI. Having received a negative answer or not having received any answer at all, you can go to court.
MFIs oversee compliance with legal requirements by the Central Bank. In addition, Rospotrebnadzor and Roskomnadzor monitor the fulfillment of the requirements of some federal laws. Also, the borrower has the right to apply to the Federal Antimonopoly Service, the Federal Service for Financial Markets.