Yuriy took his first bank loan – 700 thousand rubles – to renovate his apartment. He understood that interest rates would be higher than advertised, that he would be urged into loan insurance and a credit card. But he has not estimated all risks.
Yuriy, factory worker: “In a few months my girlfriend got seriously ill and instead of renovation we spent money on her treatment. When I was late with payments, I came to the bank and explained the situation – they promised they would help”.
But the bank eventually refused to cooperate. Half of Yuriy’s paycheck at the factory was meant to be loan repayment.
We didn’t have enough money to survive. Some times only had a thousand rubles for a month. Covered a few repayments with my credit card. But when I ran out of this money too, the girlfriend advised to turn to a micro-finance organization.
As a result, Yuriy had seven simultaneous loans opened. Debt collectors drove his grandmother to a stroke. Having succumbed to psychological pressure, he turned to lawyers.
Each folder here holds a history of financial mistakes. The most frequent one – a family takes a loan, thinking that the paycheck of one of the family members would be enough to cover a monthly fee. And the paycheck of the other would cover daily expenses. Until something unforeseen happens – like one of them losing a job. And then – missed payments, late payment charges and pre-suicidal state. The fact that very few are aware of – a late payment charge claimed by a bank can be contested.
Dmitriy Mironov, director of a legal service: “This is a court’s decision which took effect. The bank demanded that a person pays 1.1 million rubles of debt, but court ruled that the person had to re-pay 600 thousand rubles. So we slashed that amount by half-a-million. It is a good example of scare-mongering by banks – that we would seize everything you own. And it’s not true. A court can decide the responsibility, and one should not be afraid of that”.
Now you can buy just about anything through a loan – from apartment or a car to new teeth or a bottle of premium alcohol. Store even provide loans for usual groceries. And many are ready to be economically enslaved for half-a-kilo of elite cheese. Another trick – loans for jewelry, with one’s credit card.
Evgeniya Altfeld, reporter: “Loan-mania is compared by modern doctors to other dangerous addictions. It does look like a disorder, doesn’t it? When students buy mobile phones and have to save for months, sometimes saving on food and giving their entire stipend to banks”.
Negotiation rooms are the sacred altar of any bank. It is here than new credit products are being developed and employees undergo training. Andrey has been working in this industry for 18 years. And says that its trend is the so-called pre-emptively approved consumer loans. Those text messages from banks with loan offers, which all of us receive from time to time. In 90 percent of the cases, those hit the target – because those are generated by the system, not people. Assited by Big Data – which knows where, how and for what you spend your money.
Andrey Zakopaev, representative of a bank: “It allows us to come up with an individual offer. If you travel a lot, you would be offered currency credit cards”.
A former bank worker told us over the phone how loan sales managers work – to ensure that clients do not leave without debts.
“There are entire works of psychologists – on how to find an approach to a client, and which words should not be used. Usually, a client is not told some details about a loan. A minor scam, of sorts”
First loans in St. Petersburg were handed out during Elizaveta Petrovna’s rule. Only the elites could inquire about that with a bank. Loans also existed in the Soviet Union – with a 2 percent interest, deductible from salaries. This is how one could buy a much-coveted Lada car. But, importantly, you could only take a second loan having paid off the first one. Today, interest rates are 30 times higher – if you need an urgent loan and lack all the necessary documents. And there could be dozens of loans per family. For instance – at micro-financial organizations. We’ve paid one of those a visit.
It takes five minutes to get a loan, having provided contact information of three friends or relatives. The ones who are probably disregarded.
Even the loan shark from Dostoyevsky’s book had a lower interest rate – 10 percent of a ruble per month, as she told Raskolnikov. The loan sharks of today have a much higher demand.
The loan market in St. Petersburg is growing. Around 60 percent of working adults have bank obligations. Is that evil or the driving force of the economy? It depends on the goal of those opting for a loan, according to experts. Solving a serious issue or an emotional purchase by a victim of marketing campaigns.
Olga Nikiforova, PhD in Sociology: “In Europe, people often get loans for education, healthcare, real estate. Those are serious loans. Here, the number of mortgage loans is almost the same as consumer loans. So people are equally willing to get loans for apartments or mobile phones”.
It’s easy to estimate your possibilities. Financial consultants have an accurate scheme.
You think your salary is your money? I have to disappoint you – no. These are your obligations. Fees for your apartment, children’s education fees. All that’s left after all of these obligations – that is your money. Let’s say, your paycheck is a 100. You spend 80, 20 remains. And you think you can afford a loan with a 20 paycheck? No.
Fighting loans is like fighting economy itself. And even if every single working person has a loan, the world wont collapse. The question is the concrete load on a single family budget. But in the 21st century – the age of banks and online loans – your financial literacy is the matter of your own safety. Yours and your family’s.