This year, the demand for loans has increased significantly, and there is an explanation for this. Record minimum rates of banks and the Central Bank, a small inflation – everything indicates that the time has come for formalizing relations with a Russian lender. But does it make sense to pursue profit, afraid of losing time? Bank credit is not the pies that are taken until they are cold.
Even if the need for a loan arose, it would not hurt to think about what the amount lent from the bank gives. Benefit or perspective? Danger or way to achieve the goal? Meanwhile, banks are urging potential loan applicants, promising favorable terms. And they are right.
When 8 years ago, the bank’s 14 percent mortgage rate was economically beneficial, it was difficult to assume that borrowers would soon choose between 6–7 percent loans. But such dynamics cannot last for a long time. The question arises, has it not come time to enter into loan relations with the bank?
To take or not to take?
VAT has risen, gasoline is becoming more expensive, everyone is waiting for inflation and major changes in the volume of wallets. It is hardly worth waiting for the earnings to keep up with the total price increase for almost everything. In such circumstances, Russian banks are fueling interest in loans, attracting a low rate. The debt burden of Russian borrowers to banks has reached horrendous numbers, in almost every family there are a couple of credit cards or a housing loan has been issued for a couple of decades.
The figures show that the calculation of banks at a low rate for borrowers worked. And in 2018, by the end of July, the results of the last year in terms of loan volumes had already been exceeded. The impression is that, preparing for the worst, Russian borrowers still hope to pay, because in the conditions of ruble depreciation under the weight of various factors, the amount that the bank will have to pay later will significantly lose its “weight”.
Bid is important!
Over the course of several years, the percentage of loans taken out of banks by borrowers has been steadily declining and has already reached minimum values. Maybe it makes sense to borrow the necessary amount to solve current problems, if you have to pay for it with a minimal overpayment to the bank.
Banks will tighten requirements for borrowers and more carefully select candidates for a loan, worrying about the growth of credit defaults. Expectations of raising interest rates by banks are justified, and this stimulates the design of a bank loan now.
The estimated fall in the ruble exchange rate will lead to the depreciation of Russian banknotes. Putting rubles in the “jug” becomes meaningless, since the amount will depreciate faster than the savings appear, sufficient for a large purchase.
The currency intervention, which began on August 7, subsided for a while, however, the ruble was not able to win back the position, and in September we see fluctuations around the mark above 70. Soon, the government will continue to purchase dollars, and there is no reason to assume a ruble strengthening. The weaker the ruble becomes, the higher the risk of depreciation. To postpone the purchase, hoping to maintain current prices, it is not necessary. And this is another reason for spending today. You will need to return the money when their real value becomes less.
So it’s time to take out a loan, or weigh the pros and cons again?
The main risks of a loan
If we compare the previous years, inflation is still at a low level. For 2014, the average loan rate at the bank was 18% with an inflation rate of 11%. Given the inflationary depreciation, the overpayment does not look significant. In 2017, with an average bank rate of 13%, inflation was 2.5%, i.e., it became more costly to repay the debt to the bank, and a drop in the loan rate reduced the gap increase.
Now we are waiting for the growth of inflation and the weakening of the ruble, so the argument against lending easily turns into an advantage. If the borrower takes the ruble from the bank, then it will be easier to repay, since the country’s currency will depreciate.
Bank customers fear that the system will face tough times. Separate financial structures will be tight. Gref’s assurances that there are no reasons for concern do not inspire optimism; a reasonable borrower during a period of instability would prefer to give up increased financial obligations to the bank. A crisis is often accompanied by a revision of financial benchmarks, a decrease in income, an increase in the risk of bankruptcy of banks and borrowers. The parties bound by credit obligations will find themselves in a difficult situation: failure to return will have a sad effect on the bank, and it will become more difficult for the client to cope with the payments due.
The media reported an unprecedented collapse in real estate prices, automakers do not get tired of announcing stocks to organize sales of new cars of the previous year. Taking into account the evolving circumstances, this moment becomes a good reason for buying cheap movable and immovable property for loan funds received from the bank.
Although the advertising of banks is aggressively reporting total reductions, it is not necessary to immediately respond to the very first thing that caught the eye, the announcement: a reduction in interest does not mean a benefit for the client. It’s time to think and make a decision that will give the best result. A person should know how he will cope with the payment of debt.