It would seem that it is very convenient: by paying an insignificant part of the value of the thing, you can gladly use it, paying the debt in parts, imperceptibly for the budget. But is it really so?
Thank You, Advertising
The widespread use of credit in our lives is the result of the efforts of advertising in various media. Commercials in our time have become much brighter, more colorful and more creative than at the dawn of their existence. Cute people assure us: it is only worth taking a loan and our life will become much more interesting, comfortable and high-quality. And for this, they use special, scientifically based methods. And you may personally check it by following this link https://www.bestadvisor.com/credit-reports.
Consumer Credit and the Dangers That It Hides
In conformity with the Federal Reserve System, the volume of consumer credit is only growing every year. And of all types of loans, consumer credit is the most dangerous for all borrowers.
- The first danger of consumer credit is that it is issued under the influence of a minute impulse, and not a meaningful decision. When receiving such a loan, the borrower does not realize that the largest interest is paid on a consumer loan. And often they reach 80% per annum and even more. That is, instead of one thing acquired on credit, after the year it would have been possible to purchase two of the same things.
- The second danger of consumer loans is their availability and ease of obtaining. Indeed, in most cases, a loan requires two to three documents and thirty minutes of time. And the main role here is played by the inability of the borrower to distinguish between the “necessary” and the “desired.” This list of the “desired” things and the maintenance of such an image are actively supported by the omnipresent advertising financed by credit organizations. In most cases, the borrower comforts himself with the thought that he can afford to repay the loan, not realizing that if he has not yet deferred the necessary amount, it is unlikely that it will be easy to make monthly loan payments. And often the borrower, in order to repay a loan in one bank, opens a new loan in another credit institution at an even higher interest rate.
- The third danger of consumer loans is that it has a direct negative effect on the economy. An ordinary borrower is not accustomed to planning his life for several years and is not able to foresee the macroeconomic consequences of his ill-considered actions. If someone takes a consumer loan and buys something for it that he hasn’t earned yet, then his salary will be significantly reduced – after the monthly repayment of the loan, the debtor only has enough money for food, and he stops using other goods and services.
Thus, consumer credit is not only supposedly convenient but also potentially harmful for everyone except credit institutions. In any case, it is necessary to approach this issue in a balanced way and try to use this opportunity only in case of emergency.