Consumer credit is an advance granted by a financial institution to make an expense when you do not have enough money. In the Republic of Moldova, banks and non-bank lending organizations are the institutions that can grant loans to individuals depending on their individual situation.
Even though consumer loans can be granted in different forms, however, the basic elements remain the same and must be understood by each person.
The loan is granted on the basis of an agreement between the financial institution and the natural person that appears in the form of a contract. There are rules that establish the basic provisions of the contract and allow you, if necessary, to cancel it. Thus, the Law on consumer credit agreements establishes the information that must be included in any loan offer, the most important being:
- nominal interest rate and other commissions included;
- the total value of the loan;
- effective annual interest rate;
- the duration of the credit agreement;
- the total amount payable and the monthly installments.
The law provides for a period of 14 days in which the consumer can request the cancellation of the credit agreement. You are not obligated to justify yourself, but you must return the money you have already received plus interest.
You also have the right, at any time, to repay a loan earlier than the contract provides. In this case, you may have to pay certain penalties, however, the payment should not exceed the total amount of interest “actually lost” by the financial institution.
Comparison of offers
Comparing credit offers before making a decision is an important step in choosing a product that suits you best. In this sense, DAE is a very useful indicator because it allows different credit offers to be easily comparable without necessarily having a financial background.
The DAE includes all the costs of a loan – the interest to be paid, the related commissions (grant commission, management, etc.), with the exception of penalties for late payments, and express them in a single figure.
What to watch out for
Even though consumer credit can improve individual or family comfort, it carries certain risks that can aggravate the financial situation. Over time, the interest rate may change in the sense of increasing the monthly rates. Also, other events such as loss of income or job loss can affect coping ability.
periodic payments, including credit rates.
People with low incomes, those with unstable incomes or those with the low financial backgrounds are the most vulnerable and exposed to the risk of over-indebtedness. Therefore, it is important to carefully evaluate the need for a loan and the repayment capacity. At the same time, the financial system comes with solutions, such as insuring against possible unforeseen events (unemployment, incapacity for work or payment, etc.).