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Beware of microloans

Many people have before Christmas deep pockets and looking for opportunities where you borrow money. People in Need has been calling for some "trash" practices associated with lending. The organization now warns against the danger of so-called. Microloans.

The percentage of people who are unable to pay unexpected one-off costs in the order of thousands of crowns, according to research in the Czech Republic is high (see eg. Here). From the perspective of a person with financial problems seems to be the Micro-appropriate and seemingly safe solutions. 'Půjčím A few thousand to a few days, will pay an unexpected slip and after payment of the debt to pay. Execution of microloans is also so easy - just send an SMS, no complicated paperwork, no signature is třeba'.

What, then, is the danger seemingly simple "payday loans"?
"It is important to realize that the real business is on these loans can be created only when people are not paying. With the company knowingly calculate and adjust the terms and conditions under which the micro provide, "explains
Michael Baslová, debt advisor for People in Need. Strategy providers of micro-starts a gentle step. "The first loan is for free. After its repayment is immediately available to loan another. It had however considerable interest. APR in the case of micro-credit in the hundreds or even thousands of percent! "Says Michael Baslová.

In case of further delay in the vast majority of society does not allow to adjust the repayment schedule, but only postpone repayment fee. This, however, is the fact that the debt continues to grow and what the borrower manages to repay, not on debt redemption, but only on a fee for postponement of repayment. For each delay is also charged a fine, usually in the order of several thousand. In addition, they are charged but also reminders which company to delay the debtor's attention. "Even though the fees are just a couple of hundred crowns, the vast majority of the companies does not restrict the number and form of reminders. So can walk on a daily reminder SMS or email. Per month, so the debt only reminders can lift hundreds of dollars, "warns debt counselor.

Basic mechanisms enabling generate high profits on mikropůjčkách are therefore sanction fees for reminders and fees for the postponement. And what are the pitfalls that many people got into the trap of unmanageable debt spiral. "The problems caused by micro loan, we meet more often. Although at the beginning of the case, to just three of thousands of debt, the impact on the borrower are often irreversible, "says Michael Baslová. It further notes that for loans of less than five thousand is not possible to contact the institute of financial arbitrator, who may for other debts against unethical practices help.

We also focus on the business practices associated with microloans. After approval of the loan will begin to walk clients call for exhaustion of the whole approved credit. "Borrows If someone for example. Three thousand and the approved limit of the loan is five thousand, then he can walk should also be every other day, an SMS message with a call to take advantage of the full limit and even borrowed the remaining two thousand, "says Michael Baslová way of coercion. It is strongly recommended to avoid microloans great arc.

Source: tz PIN

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