Lending — Three Debt Risks – Debt Consolidation

Encouraged by the bad experience of repaying loans contracted at a variable interest rate, citizens have turned to a safer way of borrowing and are increasingly contracting loans at a fixed interest rate. The term fixed interest rate refers to the agreed annual interest rate, which is the same for the entire loan repayment period. In recent years, a combination of interest rates has appeared in banks’ offerings. pegasus-one.org for a critique

Fixed interest rate in the initial repayment period


In the case of a combined interest rate, the client contracts a fixed interest rate in the initial repayment period, while in the second part of the repayment the interest rate is variable. Depending on the client’s preferences, in a number of Croatian banks it is possible to arrange a loan at a variable , fixed or combined interest rate.

Cash Credit Questionnaire


The article deals with the subject in detail. If you’re just looking for the best line of credit and don’t have time to read, you can fill out a credit questionnaire right away.

On the example of the offers of four Croatian banks, we will show the amount of the total interest paid to the bank, on a loan contracted at a fixed interest rate. For the sake of simplicity of review, only interest charges are given in the examples.

When making a loan, citizens have to decide between a variable and a fixed interest rate, and when choosing a variable interest rate it is important to choose the right volatility factor . Given that a large number of citizens decide to contract fixed interest rates, we will base the examples precisely on the fixed interest rate for the entire repayment period of the loan.

When they start realizing a loan, citizens often do not think about the amount of interest they will pay to the bank over a certain period of time.

Insurance instruments


It is also very important to know with which additional security instruments citizens are contracting for a loan, as this affects the amount of funds they will receive when using the loan. In the above example, a cash deposit, which is 10% of the loan amount, is used as a security instrument. What does that really mean? In this way, the bank secured 10% of the loan amount in the event that the borrower breaks, gets fired, uses sick leave or for some other reason is unable to settle his financial obligations.

However, for the same premium amount, the beneficiary could have secured 100% of the loan amount in the event of distress, and for a slightly higher premium it could also be secured in the event of financial difficulties.

Kuna loan or foreign currency loan?


Although appreciation (strengthening) of the local currency can significantly facilitate the repayment of a loan contracted with the euro currency clause, citizens fear the depreciation (impairment) of the kuna, which, as the examples show, can significantly increase their monthly obligations. Avoiding currency risk in repayment of loans is reasonable for all debtors whose income is in USD. However, contracting a Euro repayment loan provides security in the event of a depreciation, and can significantly reduce the loan in the event of a appreciation of the exchange rate.

Although loan processing fees are usually fixed and do not exceed up to USD 1,000, there are still banks that would charge up to USD 2,400.00 for a loan amount of USD 120,000.00.

Adding to this the cost of validating credit agreements and billing instruments up to USD 600.00 for non-purpose loans, it is clear that the amount of the contracted loan can differ significantly from the amount of funds paid to the loan beneficiary’s account.

If citizens spent only one hour of their valuable time and visited the cash Group office, they would save money and time because they would not wander from bank to bank in search of information that they may or may not interpret.

Loan brokerage is free of charge, and given that Good Finance has a contract with about 20 banks, you can casually leave the choice of the best loan available to our loan brokers and sleep peacefully. 

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