“Indebtedness is like a disease – the earlier it is diagnosed and treated, the fewer the consequences. But the best thing is to prevent it.” – Rodica Jalba, Chief Risk Officer

Loans are both useful and risky at the same time. For some people, they become the best solution in achieving their goals at the right time, and for others – a serious problem with penalties and fines. How to find the golden mean and choose the best credit offer? What to do if you find yourself in a situation when you cannot pay for the loan? Rodica Jalba, Chief Risk Officer at Microinvest, answers.

What do you need to think about before taking out a loan?

As strange as it may sound, but before taking a loan, you should try to avoid it. Perhaps your own funds will be enough to realize the goal. Any loan, regardless of the amount or term, is an obligation that a person consciously undertakes. It is nice to be able to immediately buy everything you want, but it is unpleasant to realize that the burden of debts you have taken on yourself in this case, you cannot do. At Microinvest, we always help our clients to analyze their financing needs with a cool head in order to take advantage of the benefits of credit and minimize risks.

What are the main credit risks?

The main mistake when applying for a loan is overestimating one’s own ability to pay. A person incorrectly calculates his income, does not take into account all his expenses, or unpredictable situations that may affect the ability to repay the loan (layoff, lower income, higher expenses, inefficient budget management, etc.). It is also very important to choose the right lender. Lending relations should be based on mutual trust. This is confirmed by the very history of the origin of the word “credit” – from the word “faith, trust”. When a debtor is stumped, he becomes vulnerable. In a trusting, partnership relationship, there is always an optimal solution for both parties.

How to calculate your ability to payas objectively as possible?

Today, financial services are so diverse that it is increasingly difficult to make an objective decision, you have to take into account many factors. It is not enough to simply calculate your income and expenses; you need to be able to compare different offers, in order to choose the best loan and lender. It all starts with assessing your ability to pay. When people need money urgently, they tend to “embellish” the reality in order not to get rejected. “Golden rule” – objectively analyze your current ability to pay. Be honest, first of all, with yourself. Keep in mind that you should always have a reserve, for your psychological comfort and allow yourself some unforeseen or unplanned spending. It is better to get a refusal today than to be in debt tomorrow and spend much more money, time and nerves.

However, what do you do in a situation where you can’t pay for a loan?

First of all, you need to accept and recognize the situation. Do not deceive yourself and do not try to run away from it. Indebtedness is like a disease – the earlier it is diagnosed and treated, the fewer the consequences will be. But the best thing to do is to prevent it. That’s why the relationship with your lender is so important. Repayment of the loan is the goal and responsibility of both parties. We always advise our clients to communicate with us in every situation, especially when they realize they can’t pay. For every problem, there is a solution. An application is filed, reasons are described to rule out bad faith, and restructuring is requested. And here we go back to point 1: assess current ability to pay and change the schedule. However, it’s important to realize that changes provide temporary relief, but they come with a price. This is why it is much better to avoid these situations from the start.

How important is financial education to our society? What is Microinvest’s opinion on this issue?

In today’s world it is vital to be financially literate. I would like to point out that financial education is not for the illiterate, but for everyone, and it should start from childhood. At Microinvest we try to support our clients at every stage of lending relations. Not all people have the necessary experience to analyze investments in a project in detail, especially at the beginning. We do all the calculations together, establish all the benefits and risks, and offer a solution and repayment schedule tailored to the type of business or need. We are also actively involved in national and international financial education campaigns that deliver results over time through generations. Timely and responsible financing can bear good fruit, we are proud of the success stories of our clients from across the country who have achieved their goals with our support. Microinvest’s goal is to foster client development only in a positive way while minimizing risk. Because the success of our clients is actually our success.

The interview was produced as part of the “Choose a Lender Who Cares About You” financial education campaign.