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What you should know about loans

 

One of the main activities of banks’ is to issue loans. At ProCredit Bank, we provide loans to support our clients achieve the sustainable growth of their business. Loans play a very important role for businesses, for individuals and for the Albanian economy as a whole.

Before taking a loan, we strongly advise our clients to carefully consider their financial situation. In some cases, e.g. the effects of seasonality on the client’s businesses, or when income does not fully cover costs, a loan may make it difficult for clients to keep up with their repayments.

A loan is an investment instrument and the repayment period should therefore reflect the type of investment. Long-term investments, such as the purchase of a production line, require a long-term loan, since the benefits of this investment will only be visible after several years.

Before applying for a consumer loan, there are some aspects you should consider. Among these, you should ensure that the type of goods or services that you intend to purchase with the loan, are consistent with the financial service you choose.

At ProCredit Bank, we advise our clients to be responsible when deciding on what to purchase with a loan, to ask whether the item or service is indispensable or if it can be postponed, and if the client can afford to buy it. That is why we suggest that clients save regularly or wait until their next salary before committing to the purchase. A loan may seem to be the fastest solution, but it is not always the most appropriate solution. You should remember that a loan has to be repaid and that your obligation does not end when you buy the things you want, but only when you have repaid the loan.

At ProCredit Bank, we also recommend that clients avoid risks associated with foreign currencies and exchange rates, by instead taking a loan in the same currency as their income. Fluctuations in the currency market may lead to the appreciation of a foreign currency, thus making a loan in that currency “more expensive”.

To ensure that you can meet the loan repayment obligations, a rigorous and sound financial analysis should be conducted before a loan is taken.