Over-indebtedness in Belgium

Is this another sign of the crisis? The number of over-indebtedness reached the record figure of 324,063 people in September 2019. The percentage of defaulting borrowers is now 5.2%. This means that out of 100 loans granted, the credit organizations record 5.2% of default. This leads the said organization to denounce the credit to the National Bank of Belgium.

Evolution of the number of over-indebtedness

Evolution of the number of over-indebtedness

This figure, frankly, changes little. Indeed, if there are more over-indebted citizens, it is also because there are more registered credit contracts.

The proportion of defaulting credit contracts remained stable. The average amount of arrears, on the other hand, increased by 2,000 dollars in 5 years. In 2007, when a Belgian had a slate, it revolved on average, around 6,000 dollars. This figure climbs to 8,000 dollars today.

The situation is mixed depending on the region. Payment default affects 8.1% of borrowers in Brussels. 6.9% in Wallonia and 3.5% in Flanders. If the percentage of over-indebted borrowers is lower in Flanders, the amount of their arrears is higher. It averages $ 9,500.

The total amount of overdue repayments rose in one year from 2.615 billion dollars to 2.645 billion dollars.

The profile of over-indebted people is very specific. Half of them are between 25 and 44 years old. In addition, one in two lives in a household that earns no more than $ 1,250 per month.

The consequences of a default

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First, the credit organization has a legal obligation to denounce the credit contract to the National Bank of Belgium. What does that mean? As soon as you have accumulated three unpaid monthly payments, the bank has the obligation to denounce you by registered mail and proceeds to file with the National Bank of Belgium.

Direct consequence: you can no longer obtain credit in Belgium as long as you do not fully settle the amount of arrears, interest on arrears and any compensation included for termination of the credit contract. Then, the law obliges you to wait another 15 months before you can borrow again in Belgium.

In addition, if the default relates to a mortgage, the consequences can be dramatic. The bank will, in addition to filing, seize the property of the house and it can be sold in the public sale (exactly as it happened in the United States or Spain following the recent real estate crises).

Sometimes, the borrower will be unpleasantly surprised to find that despite the sale of the house, his debt remains very high because the default has occurred in the first years, the borrower will have reimbursed much more interest than capital…

Our prevention policy

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We have implemented a policy of prevention of default cases and we inform our clients about mortgage credit to protect their interests as well as possible.

Regarding the installment loan, our brokers study and analyze the files of candidate borrowers as best as possible. We respect the proportion of debts that do not exceed 40% of revenues. We discuss with our customers the amounts requested, the desired duration, the allocation of funds. It is sometimes better to receive a little less money, to be more reasonable, but to be sure that you can repay your credit. This is the essential mission of advising our brokers.

In terms of mortgage credit, we practice absolute transparency. Some organizations sell borrowers very low-interest rates. The flip side is that the borrower repays much more interest than principal and in the event of default in the first 10 to 15 years of the credit agreement, it is a disaster.

We advise you to pay more capital than interest, even if it means paying a slightly higher monthly payment. The two advantages of this solution: we force you to become aware of your ability to contribute and you repay the capital much faster than the interest. In the end, the total cost of your loan is obviously lower, which is your interest.

 

How to negotiate with the bank? Fight for credit terms

In the case of very large amounts, negotiations are conducted with the treasury department or the bank’s management. Regular customers who use many services and products in a given field usually have a negotiable field. Banks appreciate loyal customers by offering them better conditions.

In the case of a negotiated deposit, the customer can also freely decide on its duration. Banks specify the time interval – usually from one day to a year, but in the end, the decision on the duration of the deposit is up to the customer. However, before making the final decision, it is worth carefully comparing the negotiated terms with the interest rates on deposits proposed by various banks. It may turn out that the standard offer of another bank bears more interest than the one negotiated by us.

Fight for credit terms

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Negotiations with the bank are important not only when we want to deposit money, but also when we want to borrow that money. Banks are aware of the fact that customers need to be solicited, so some issues remain open for negotiation. Most often this applies to large-scale mortgages or cash loans.

So what can you negotiate with a loan agreement? Certainly, the interest rate, margin or fee for early repayment may be discussed. Usually, only fees included in the Table of Fees and Commissions are permanent. It should be noted that people with higher creditworthiness, i.e. those who earn a higher income, have a better chance of negotiating better conditions.

Those who have barely sufficient creditworthiness to consider a loan application positively cannot count on negotiations unless they are regular customers of the bank and have a good reputation. However, it is worth not getting discouraged and try to negotiate the terms two or three years after signing the contract, as it is possible. During this time a lot can change in our favor.

What else can you negotiate?

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We can negotiate not only the terms of deposits with the bank. It is worth remembering that also negotiable are: temporary suspension of repayment or change in the terms of the loan agreement, related to the deterioration of the client’s financial situation.

When we are in trouble, it’s best not to avoid paying installments but to go to the bank and talk about extending the loan period or temporarily suspending the loan repayment, which will allow us to bounce back from the bottom.

Banks want loans to be repaid, which is why they usually come in handy for clients in such situations. You can also negotiate the conditions related to the maintenance and operation of a personal account, but this is only possible for accounts for private and personal banking clients.

The question of whether to negotiate with the bank often arises. It is worth trying this method, especially if we feel good in the field of negotiation and we have strong arguments for our arguments.

Cheap cash loan? Nothing difficult if you compare the offers

I will surprise you because the interest rate on the loan is not the most important feature that you should pay attention to when looking for the cheapest cash loan.

When choosing a quick and cheap cash loan, pay attention primarily to the total cost of the loan and APRC. What is the APRC? This is the Actual Annual Interest Rate. The APRC amount is expressed as a percentage.

The APRC includes:

  • nominal interest – i.e. a value that tells you what interest you will have to pay for a cash loan and how much the cash loan will cost you. Nominal interest rate is presented on an annual basis,
  • Lender’s commission – that is, the amount you pay to the bank or loan company for “borrowing” money – determined individually by institutions granting loans and payday loans,
  • additional costs – e.g. extra paid the insurance.

It may turn out that in two institutions the interest rate will be the same, but the APRC will be higher in one of them because Bank X will require you to use an additional paid product. Then theoretically cheap cash loans will have a completely different total cost.

Cash loan commission
The commission can be charged in two ways – it can be added to the loan amount or collected when the loan is launched. Consider which option is more convenient for you.

Cheap cash loan – loan granting procedure

Cheap cash loan - loan granting procedure

The bank will first check whether you are not in the Credit Information Bureau as an uncertain debtor – if you’ve ever delayed paying installments too long before, you may have a problem with taking a new loan.

When choosing the facility or submitting the application for the cheapest online cash loan, prepare your ID card, income certificate, employer’s tax identification number.

Even if these are not required documents, they will certainly speed up the procedure. Of course, if you find a promotional cash loan without certification, check this option, but be sure to check whether you are sure you will not have to document your income for the amount you need.

Additional cash loan costs

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The bank may offer you a lower interest rate on your cash loan, but you will probably need to take out additional insurance or open a personal account.

Think about whether it is worth it – the cost of credit can rise to a level at which this promotion will become unprofitable compared to the competition, which at first glance proposed a more expensive solution.

GFI cash loan

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The GFI cash loan is available to both new and regular customers of the bank. The maximum loan amount is from 1,000 USD to 120,000 installments, and the bank does not charge any commission or early repayment fees when paying back the loan divided into 9 installments. New bank customers can additionally take advantage of the promotional interest rate – 3.44%.

Good Lender cash loan

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You can get a cash loan from Good Lender Bank in the outlet – all you have to do is contact the bank helpline and the consultant will find the right branch for you.

After a positive credit decision, you can receive cash immediately. The bank does not specify the interest rate and commission amount, but for ease of reference, you’ll find a list of all required documents.

Ranking of cash loans

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Are you interested in a cash loan, but you don’t know what offer to choose? Compare available bank proposals using the convenient Good Finance comparison tool.

Every month you will also find a new cash loan ranking on the site – thanks to which you will immediately know who is currently proposing the best terms.