Loans are not for everyone

From October 2019 loans to citizens will get harder. This was announced a few months ago, time has flown, and here are the new rules take effect.

Why suddenly tightened the issuance of unsecured loans? Because the financial-economic power, not without reason, decided that the issue of over-indebtedness of citizens exist. As pointed out by the Minister of economic development Maxim Oreshkin, in the 4th quarter of last year a third of loans were granted to people whose monthly income does not actually enable to service these loans (the payment is more than 60% of their gross monthly income).

The current debt burden of the citizens was very high. Fearing that the citizens no longer pay the loans, the authorities decided to do something about it. First, though, the Ministry of economic development and the Bank of Russia argued whether the issue of over-indebtedness. Argued-argued, and decided from October 2019 to toughen requirements to potential borrowers. Now, if the level of your debt burden to exceed, say 50%, that is, the amount of monthly payments for loans be more than 50% of their gross monthly income in loan, you will probably fail. The results of such loans for banks becomes too unprofitable business. The disadvantage of this is provided by the establishment of high allowances for risk coefficients on loans depending on the debt level of the borrower.

Hooray, solved the problem of debt load citizens? — It would seem, Yes. No answer is still a “small” issue: how people with their falling revenues? Let me remind you that real disposable incomes fall 2014, that is the sixth consecutive year (recalculated by changing the methodology of calculation, plus as much as 0.1% of the index at the end of 2018 doesn’t count). That’s why people started to get into the credits because it was difficult to abandon the achieved level of consumption.

Now that lending has tightened, and the dynamics of population’s income continues to be negative, what can people expect? That their salaries will dramatically increase? Well, Yes, state employees and military retirees from October 1, 2019 payment indexed. What are the others? How many can today boast, as they abruptly raise the wages? — I am sure that a few.

But if the growing income hope is not necessary, you can either go to the shadow market of financial services, borrowing money at ridiculous interest rates, or to reduce the level of consumption. Given the current struggle of the authorities with the “liberties” of microfinance institutions, the real way is, unfortunately, reducing consumption, saving on everything and everyone. Such is the perspective…

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