Everyone in life strives to provide the best possible conditions for ourselves and our family. No matter how hard you try sometimes, it is simply impossible to set aside a more serious amount of savings from your salary. Therefore, more and more people are resorting to loans.

Today, it is possible to choose a loan for any purpose, and the interest that the bank takes depends on the purpose. In addition, the validity and time period for which you take out a loan.

Keep in mind that the monthly installment will be more bearable (lower) if you raise for a longer period of time, but the interest rate will also be higher. It is therefore very important that you inform yourself in detail before embarking on all of this.



In order to take out a loan, it is important that you pass certain checks, that is, that your creditworthiness is determined. Many types of loans are available on the market: short-term, medium-term, long-term, special-purpose, non-purpose, with fixed or variable interest rates, with repayment in installments or annuities.

It is not necessary for an individual to know the exact differences and specifics of each loan, but to understand the basic nature of the loan relationship – a loan is money that the lender gives to the borrower with the obligation to repay it increased by interest.

Being creditworthy means meeting certain conditions required by the bank, which usually refers to the amount of salary, ie whether you will be able to freely pay the monthly installment, whether you have a clean credit history, ie whether you have other credit debts, and of course whether you have a regular financial income, ie whether you are employed.

Credit risk

This is a term that can be defined as the uncertainty of the future outcome. In other words, it is “the risk of default”, ie the possibility that the invested funds will not be repaid in a timely and/or complete manner and that they will not be repaid as planned.” Credit risk refers to the risk of loss due to default under the terms of the contract.

These liabilities arise from lending activities, trade and investment activities, payment, and settlement of securities trading for own and foreign accounts. In practice, there may be cases where the other party fails to fulfill its obligations in whole or in part does not repay the due principal and interest and thus does not repay the loan on time.

Creditworthiness assessment method


In assessing creditworthiness and assessing credit risk, the Bank analyzes the balance sheet and income statement as the most important financial statements in this context. The balance sheet refers to assets, liabilities, and equity at a particular point in time, usually at the end of the financial year or at the end of the quarter.

Effective interest rate

A term that confuses many. Simply put, the effective interest rate represents the total cost of the loan and includes all the direct costs that the client incurs when approving. Therefore, the effective interest rate, in addition to the nominal interest rate, includes approval costs, insurance costs, and other costs related to loan security instruments, if obtaining these instruments is a condition for approval, other similar fees or commissions directly related to the loan.

Why do you need a loan?


We mentioned that there are several types of special-purpose loans, and there are also non-purpose loans. You need to think carefully about whether what you intend to finance with a loan is really a necessary need for you and your household or not.

Namely, buying luxury products or services on credit is not recommended. Once you have decided to take out a loan, carefully calculate how much money you really need and how much that loan will cost you.

The most important thing is that the cost of a new loan does not disturb your personal budget and that you think about how you can earn extra in that period so that the financing of that investment would not interfere with the monthly balance of your budget.

Not a good credit history? No problem!

Sometimes things just don’t go the way you planned, but luckily, that can be resolved. You can improve your credit history only by regularly settling all existing obligations to the bank.

It may happen that at some point you will not be able to settle your credit obligations. It is advisable to contact the bank immediately in such situations. Thus, loan rescheduling can be agreed upon by extending the loan repayment period and/or introducing a grace period. Also, by combining all your obligations, for several different placements, it is possible to refinance the debt.

Fixed and variable interest rate


This is a very important factor to consider when taking out a loan. Given inflation, we can hear more and more often that clients prefer to choose a fixed interest rate. Either way, it’s up to you to think and decide which option is best for you.

To make a good decision about which loan suits you best, get informed and talk to your banker to know exactly what you will commit to. You can visit to learn more about it.

Final thoughts

As we can see, there are many things to consider when thinking about the loan. It is important to take some time, do everything that’s in your power to improve your credit score, and find the bank with the lowest interest rate.

Get well informed about how the bank is planning to insure itself in that credit relationship and think carefully about whether what you are buying is really worth so much as to allow someone to charge from everything you own.

Keep in mind that you will in any case return more money than you borrowed, so think again. If you still think that loans are the only solution – go for it!