It was another time when I made sure that far not everybody has enough understanding of credit nuances (despite statements of my first blog’s readers), and that we have to write on this topic not less than about coming crisis on the real estate market of our country that has being written about in almost all MM.
In this note we are going to talk about some nuances of purchasing goods on credit. Bankers may not take the trouble of reading these lines as they might suppose I will not surprise them with anything new. But for those who are planning to tie themselves with credit bonds for the first time, it will probably be useful to get familiar with results of my observations.
So, you may have already noticed that till present time many banks offer purchase goods loans, and you can frequently see bank representatives in mobile phone and household equipment shops. The whole procedure looks like this: a manager asks you to reveal your passport, identification code and income certificate, and then credit arrangement procedure begins. Some banks do not even require documents confirming your income in order to simplify credit making procedure.
But almost all the banks charge additional fee for such a simplification.
Thus, for instance, VAB bank offers 10% one-time commission credit on condition of showing an income certificate, but it will be 15% without it.
Rodovid Bank (a credit of 5 000 for one year):
- With an income certificate – 10% rate, 2.2% one-time and monthly commission – efficient interest rate is 40.46%,
- Without an income certificate – 12% rate, 2.5% one-time and monthly commission, efficient rate will rise up to 46.62%.
These are just some examples of how revealing one document can change credit expenses of a borrower. You can observe the entire market picture with the help of credit ratings.
If you want to save on credit payments, or there is no bank representative in the necessary shop, you can get an invoice of the product, add it to the rest of required documents and go to the bank branch. Getting a credit at the branch has its advantages and disadvantages. Good point is that, as a rule, such a credit will cost 20 - 30% less than crediting at the shop. Bad point is that getting a credit might last a few days (look Consumer credit – ABCs for beginners).
Now let’s talk about interest-free credits. In most cases these are actions for certain goods, which are effective only during definite period of time. Real annual interest rate for such credits is often 0% (to be precise, 0.01% or 0.0001%). But when choosing interest-free credits it is very important to pay attention to additional payments required by the bank. It can be one-time commission or an insurance, the amount of which might fully cover all saving on ‘zero’ interest (read more – Interest-free credits – truth or lie).
At the end I would like to inform you that within the last two years average efficient rate of interest for purchase goods credits hasn’t been lower than 45%, and at the moment of writing this blog it was around 50% (49.97%). So if you are going to purchase goods on credit on ‘zero’ or ‘very good’ conditions, be watchful and read thoroughly credit agreements before signing them.
