Banks fighting for clients with free loans – Borrowing not worthwhile for those with low earnings

The struggle of banks in the Serbian market to attract clients is more than noticeable.

The ever decreasing number of credit applications is forcing banks to offer new products, including free credits – as noted by the Kamatica website. The credits are favorable, but banks offer them to new clients predominantly.

Although there are no interest rates on such loans, they too come with expenses. First, RSD 240 plus RSD 50 in bank bills, as well as account maintenance expenses throughout the repayment period have to be paid at the Credit Bureau. These expenses are present in all banks and reach up to RSD 330 a month when taking out a free loan, which amounts to RSD 3,960 a year. Still, the amount is lower in most banks and ranges from EUR 150 to 200 a month.

Free loans also come with far lower salary encumbrances. In taking out a loan, the salary can be encumbered by 40%, whereas in taking out free loans, the maximum encumbrance is 24%. This means that the bank can grant a free loan to a client whose salary is, for example RSD 70,000, in the maximum amount of RSD 200,000. In that case, the monthly installment amounts to RSD 16,677, and the debt-to-income ratio is 23.81%.

This type of borrowing is not worthwhile for those who earn much less. For example, a salary of RSD 30,000 allows for a RSD 100,000 loan, with the monthly installment of RSD 8,335, since there’s a time limit on the loan and a repayment period of 12 months.

Dubes Beograd - Kamatica.com

Kreditni Biro Udruženja Banaka Srbije Beograd

free loans

Kamatica