Life on credit is something Croats have mastered far better than their European Union counterparts. Costs of living that exceed average incomes have forced the citizens of Our Beautiful to make the best of their knowledge and skills.
This year, total loans to citizens amount to 125 billion kuna, and more than half of them are kuna loans, according to the latest data from the Croatian National Bank. Most loans relate to home loans, home renovation loans, and short-term non-purpose loans.
The popularity of long-term loans on the decline
Long-term loans have been in high demand in recent years, primarily due to subsidies offered by the Government for the purchase of the first property.
This encourages young people to take out loans at a more favorable interest rate. Housing renovation and the purchase of older properties are also being encouraged, all with the hope of stopping the wave of expatriation.
Dedicated and non-purpose loans
Short-term loans, as opposed to long-term ones, never lose in popularity. The only difference is that people prefer non-purpose loans to special purpose loans. For special purpose loans, the financial institution from which the money is borrowed determines the purpose for which the money is to be spent. Most commonly these are car loans, home loans, student loans, pawnbrokers, consumer loans…
The non-purpose ones are far more in demand due to the fact that they do not have a specific purpose, but the client can spend the requested money at whatever he wants. Most often, these are cash loans characterized by smaller amounts and a short repayment period.
Long-term loans offer lower interest rates but short-term savings
The biggest difference between long-term and short-term loans lies in the repayment period, the amount and the interest rate. Long-term loans are issued for a minimum of 10 years, but have a more favorable interest rate than short-term ones. Short-term loans are an ideal solution for all those who do not want liabilities, and although their interest rate is slightly higher, when viewed with a short-term repayment plan, the interest rate is much lower than with long-term loans.
How to get a loan?
Looking for credit should be well informed. It is best to collect several offers from different financial institutions such as banks, savings and loan companies and credit houses. The tenders are usually short-lived and often vary from month to month. Therefore, it is necessary to check by when the offer expires so that the interest rate is not higher than predicted.
When granting loans, banks and savings and credit unions rely on credit reports and creditworthiness of clients, which are influenced by a variety of factors: type of employment contract, employer status, number of dependents, receipts, debts and the like. Many are therefore unable to obtain credit because, for example, their employer situation is not the best. Credit houses rely more on clients’ financial tidiness. The most important thing for them is that clients have regular income and duly settle their debts in order for their loan application to be approved.