Examples of the great bankruptcies of private entrepreneurs and the unimaginable countless tragedies of households should serve as an example and at the same time be a warning to carefully look at the institutions in which we incur financial obligations. Falling into a spiral of debt, from which there is not a way out, has become so common that the Ministry of Justice decided to take an interest.
How to control in time of financial crisis
Government officials have in mind maximum protection for a citizen who loses focus on his own situation and rational ways to control it at the time of the financial crisis. The Act on payday loans, provided for in legislation this year, is to protect the user of banking and loan services on the one hand.
On the other hand, it aims to develop and consolidate good practices in enterprises offering such services. Payday loan is a financial product often used by people with a low level of economic knowledge. Awareness of the existence of profitability indicators, discount rates and other factors that should light an alarm light in it, practically does not exist.
The citizen reaches for payday pay because he is easily available. They are often used by people who have either lost their creditworthiness due to improper performance of previously incurred obligations, or are unable to certify their income that they will be able to pay off those arising in the future. Either way, for every bank such a client does not promise that the bank will receive its money.
Loan without demanding statements
However, usury companies see in such people an easy sacrifice. They give them loans on a tray, often without demanding statements or collateral other than the customer’s assets. Contracts are constructed in such a way that all prohibited practices are dressed in a language that does not arouse anyone’s suspicion.
The new law on payday loans is to change this. The Minister of Finance promised to ensure that the interest rate on loans does not go beyond the real possibilities of repayment. That the debt spiral does not grow at a geometric rate. He also announced the civilization and tightening of a whole range of private loans regulations. And all this to protect the citizen from his own imprudence.