Take out a credit card for regular expenses, ask for a loan from the bank to renovate the house, finance purchases online in several installments and ask for microcredit for last minute emergencies. That’s how it is credit combo that is within the reach of any citizen and leads to excessive debt in Spain. Dangerous practice but more widespread than desired.
By dragging out one loan after another, even if they are small, they generate interest that over time becomes unaffordable for many people. According to the data provided by a report by Agencia Negociadora (a company that mediates between organizations and clients to reunite debts), on average, clients who reach levels of excessive debt have received seven loans and are paying about 1,900 for all of them per month. A large figure to endanger the stability of the domestic economy. “He is debt relief It’s not so much about having a lot of money as it is about too many small loans at unaffordable rates. It is at this point that the snowball starts rolling,” explained sources from the entity.
The document states that citizens have very easy access to credit, especially the most expensive credit. The study analyzes 25,000 cases of over-indebted customers who have requested re-consolidation of each loan with the aim of establishing more lenient installments to face. And based on these files, the report explains the points on which people who overcome debt agree. “One of the main factors influencing over-indebtedness is the ever-increasing supply of consumer credit products in their various forms, which has led to fierce competition and an appetite for risk that the -always falls on the weakest party ever. they indicate from Agencia Negociadora.
It all starts with using a credit card to finance any type of expense. In this sense, the report shows that people with too much debt use credit cards as their preferred method of payment, even for current expenses, a dangerous and widespread practice. 99% of over-indebted clients had at least one credit card and 83% had three. “It is logical if you take into account how easy it is to get a card and that the deferred payment option does not depend on the approval of the organizations, but is activated at will from the bank’s own website,” the report says.
These figures also include circulation cards, one of the most controversial financial products in recent years. has caused thousands of complaints because of the high interests involvedwhich can be higher than 20% APR. This is a method in which the client has a line of credit that is divided into installments and chooses which installment to pay. In many cases this payment is too low and does not even cover the principal, which causes the debt to grow as well as the interest. The client may only pay interest and not even cover the entire amount, so instead of reducing, the debt increases.
The Agencia Negociadora report warns that the pressure of recurring credit does not stop growing every year and 31% of clients with excessive debt had contracted one. The average debt for this product is around 8,000 euros. According to data from the Bank of Spain, there are currently 10,643 million euros in balances awaiting amortization for revolving credit, a figure that has remained almost unchanged since 2020. “It strongly indicates that it is the easiest credit to get turning and the hardest and most expensive thing is to return,”
Easy and fast credit are the most expensive
Other items that are also part of the the over-indebted cocktail is bank loans. This is the most traditional credit and among the options available to any citizen, the safest, because before issuing it the bank must perform a solvency test on the clients to ensure that they will be able to to pay It’s also cheaper, with rates currently around 8%, half of what a credit card or loan might charge. turning. But it can still be a financial burden if combined with other debts. 85% of over-indebted people had taken out at least one, 64% two and 33% more than three bank loans.
Also, micro loans, which has been popular in recent years, contributing to the destruction of many homes. These are very low value loans, usually between 100 and 1,000 euros, which are granted immediately and have very short repayment periods of just a few days or weeks. For this reason, the interests are also much higher and it is common to find APRs of 3,000%, 4,000% and 8,000%. Beyond high interest rates, the risk of these products lies in the fact that they are offered by platforms that are not supervised and do not always meet the criteria of good practices and analysis of so- the client’s injury, because they are not obligated.
“In a short time we are away from our bank requiring a complete financial analysis to request a loan so that we can get up to 5,000 euros quickly and easily, even through the internet, without even presenting a payroll. What many people don’t know is that the easier and faster it is to get credit, the higher the cost of credit. That is, the easiest money to get is the hardest to return.”
The Government is currently studying How to pass the European consumer credit guidelines. This is a rule that aims to give clients more protection to avoid over-indebtedness and should be approved by November 2026. To do this, all companies must Credit will be registered and supervised. You also need to design measures to avoid credit pricing abuses, such as fast limits or price ranges that cannot be exceeded.
2024-10-21 05:18:00
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