“You get into trouble without realizing it.”

Julian Lopez is 51 years old. He lives in Madrid and works for a consulting firm. He has a good salary, but that hasn’t stopped him from getting into unsustainable debts with soft loans. “When you ask for financing or a card, if you are not on the defaulter list, they will give it to you. They do not fully study your level of indebtedness. You get into a mess and you don’t realize it until you can’t afford it.”

In his case, he worked with many traditional banks, which ended up being problematic, but also with other types of financial companies such as Wizink and Cetelem. His mortgage is almost paid off but he made bad decisions. He financed cars, some work he had to do, son’s school and other university…

He ended up hiring multiple lines of credit and cards. “I started paying, but I couldn’t,” he says, adding that he ended up paying €4,000 a month for all those credits; some credits paid with other credits, That was indefensible. So, he sought help, in his case from Agencia Negociadora, a company that specializes in debt restructuring. “It was a daily stress. The last thing I wanted was to go to my family,” he says. With the help of the aforementioned company, he was able to pool his debts to pay “only” €900 a month, despite the terms being extended.

They confirm from the negotiating agency that more and more people are resorting to fast cards and credits to finance their daily lives and to make ends meet. They even point out that someone pays the mortgage with a credit card.

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This means that too Distressed families multiply. They pointed out, “We have recorded an increase of more than 30% in requests for credit collection operations since the beginning of this year, which means that the data means an increase in financial fees for various concepts in households.”

Mortgages vs. “Revolving” Cards

In this sense, not all loans are equally harmful to financial health. A mortgage is the best credit and quite the other side are products like “revolving” cards and super fast credits.

At Asufin, they’ve also noticed an increase in customers in the past year who have been forced to contract these credits to make ends meet. a Borrowing “out of necessity” Through microcredit in financial companies that devote themselves to this field but often end in disaster.

The fact is that entities like Cofidis, Vivus, Creditea, etc., which are dedicated to the credit business of consumption and dealing with unforeseen events and expenses out of necessity, have been down for several quarters. Significant growth in loans They give Cofidis, one of the leaders in this credit sector, its activity grew by about 18% in 2022 due to the increase in the financing needs of families. Despite everything, they note from Cofidis that the late payment rate remains low. “There have been many alerts, but it’s not as much as expected,” says Ana Julsa, Cofidis’s director of digital business and marketing. “Default is always an issue, but the 5% rate is maintained,” he adds.

More than 4,000 million

Thus, from the statistics of financial credit institutions, an increase of about 4,000 million euros in financial loans can be seen since the beginning of 2021. It is an amount that is required to increase, according to financial sources, although not all of that is counted in this figure as ultra-fast loans that are granted.

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And go to Easy and fast loans It can easily end up becoming a problem, as seen in the banking sector. For their part, they complain in the banking sector that the entities that grant this type of credit do not have the same supervision and regulation as conventional banks; In other words, it is easier to access certain financing, with the risk involved.

If we see that our economy is not doing well, we should avoid doing so. The problem with these types of loans is the snowball effect,” they note at Asufin, which warns From the dangers of using these credits day in and day out, Because the problems are piling up. Debts pile up until the situation becomes unacceptable. “You have to use an official where the cost is controlled and always try to pay off the credit as quickly as possible in our economy,” they continue from the Consumers’ Association. In this sense, they maintain that if you can pay a fee of 200 euros, it is better to pay this rather than a lower fee to finish repaying the loan as soon as possible and have less interest.

interest up to 25%

«The easiest credit to get is the most expensive credit to pay off. In this case, the gold medal goes to credit cards, whether traditional or “revolving” with rates of up to 25%. The next most expensive thing is supermarket financing, about 18%, and from there down to express credit, traditional (consumer) bank personal credit and mortgage. Special mention, small loans for one month, at rates up to 1,000%,” the negotiating agency warned.

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In their case, they obviously have to go to quick credits to pay the fixed expenses for the month.”Things are not going well. The risk in the medium term is financial collapse,” but they add from the company that every situation has a way out. “The good news is that it is possible to solve this problem quickly and restore oxygen, peace of mind and, ultimately, quality of life: implement a debt consolidation process or Credit pooling process.

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