Loan with 100% deposit as collateral - Sounds odd, but exists in Serbia

Whether because of the crisis or the competition, several banks in Serbia offer a very specific loan under nearly identical conditions. It is a cash loan with 100% deposit as collateral, while one of the banks even requires that deposit to amount to 105%. Such loans are significantly less interesting than common cash loans, but there are interested clients, mainly those without a regular income.

This loan can either be granted in RSD or indexed to EUR. So if you have a sum of money that you don't want to spend, you can deposit it to a bank as collateral and take the same amount of money from the bank for a certain interest. Once you repay the loan, the bank will return the deposit to you. Of course, the interest you pay to the bank is higher than the interest paid by the bank for the money put down as the deposit.

- Such loan offers several benefits: the client is not using his or her money, but the money provided by the bank; the interest rate is significantly lower than for standard cash loans; the client does not have to be employed in order to take out this loan; and minimum number of documents are required - say people at Erste Bank.

People at Banca Intesa, which grants loans with 105% deposit as collateral, are of the similar opinion.

- This type of loan is mainly interesting to clients who have an income, but it is either not regular or cannot be documented, which is why the bank grants them a fully secured loan. It is also interesting to clients who want to use it as a stimulus to start saving. Loans with 105% deposit as collateral are approved with the fixed nominal interest rate of 5% on an annual basis, that is, the effective interest rate from 6.15% per year - people at Banca Intesa explain.

Economists and financial and banking experts agree that, although unusual, this banking product is completely in line with the regulations. They specify that all that is an illusion that you have your money, but instead of spending it, you give it to a bank to save it for you, and then, at the same time, you are taking out a loan in the same amount with, of course, certain interest. It is just another specificity in Serbia, 24 sata daily cites its interlocutors as saying.

Loan in RSD with 100% deposit as collateral

Osnov - Iznosi
Loan - RSD 500,000.00
Deposit - 100%
Repayment period - 72 months
Monthly installment - RSD 8,512.50
Loan+interest - RSD 612,900.00
NIR (per year) - 6,95%
EIR (per year) - 12.25%