Czechs are increasingly thinking about the back door when considering a loan. Concerns about insolvency are reflected, for example, in the higher number of applicants listed for a single loan and more frequent credit insurance.
According to Bankil data, in 2016 the share of loans with two applicants accounted for almost 40% of the total volume of loans provided. “ The partnership loan is beneficial for clients because the two applicants reduce the risk of being unable to repay. Moreover, they can get better conditions in two than individuals. They get better interest and can borrow a higher amount, ” explains Kyle Manuer from Bankil.
Certainty on the other side
The status of the so-called co-applicant was first introduced by the credit companies themselves for their own protection. According to Bankil surveys, the people themselves want to have this possibility. Only 30% of Czechs would take the loan alone, while half would prefer to borrow money with another person. The distribution of the risk of inability to repay the loan plays an important role. This is the second most common reason why people would decide to take out a loan with another person. The first is the possibility of sharing a loan with another person for more favorable conditions that some companies offer to couples.
More security with credit insurance
In addition, people try to reduce credit risk through credit insurance, which usually covers inability to repay due to job loss or illness or injury. “We advocate responsible lending and insured repayment insurance to all. Although insurance means additional costs for the loan, it brings certainty to the client in case anything happens to him, ” adds Kyle Manuer.
Risk of wrong selection
Although the Czechs are trying to visibly reduce the risk of credit through these channels, they still have something to improve. According to recent surveys, most of them are still unfamiliar with credit issues and more than a third study business terms before signing a credit agreement for a maximum of 5 minutes. Thus, the greatest risk lies with them when selecting the lender. “Especially less diligent clients should pay increased attention to the choice of a suitable provider and prefer trusted institutions, ie banks and branded non-banking companies that offer transparent conditions as well as adequate customer service to resolve any ambiguities,” says Kyle Manuer.