The absence of information doubles the costs of some credits

The loans of small values, granted fast for short terms but at higher costs than at banks, this is the key of success of the most non banking financial institutions. Almost weekly it is spoken about the join on the market of a new NBFI, prove that there is still room for this type of activities.
And the fight for each customer is worth, in conditions in which there are cases when the returned sum is more then double than the loaned one.

The loan with the identity card made history in time. Unofficial statistics showed that a Romanian out of three resorted at least once to this type of loan. Meanwhile, the enthusiasm calmed down. It is still practiced in diverse ways, in the big household devices networks.
However, the loan to residence, step by step wins terrain. A kind of CAR (mutual help house), how say the ones that take loans before 1989, but more expensive. Both loan types are next to others in the portfolio of the non banking financial institutions (NBFI). In order to activate in Romania, these institutions must be accredited by BNR and to respect some norms, as in setting up as in carrying on the activity. But they don’t have to make up obligatory minimum reserves, thing considered on the banking market as discrimination. It isn’t allowed to draw up deposits either.

This is also one of the reasons put in front when it is spoken about the too high costs of the products offered. While the banks can finance their operations with cheap deposits dragged from natural persons and companies, the NBFIs have only their own capital and the loaned money. There are also some NBFIs associated to some banks which offer just not guaranteed or just guaranteed credits, directed on the leasing type financing or for special projects etc.

Big crowd

The centralized data by the National Bank of Romania shows that in our country activate over 4.500 non-banking financial institutions, on diverse loaning segments. To these are added other 141 which have notified BNR for the directly supply of services. A figure of 100 times higher than the banks number. Now, in Romania there are 29 banks, to which are added other two for houses and 13 foreign credit subsidiaries of the member states. In these terms, it’s easy to understand that the Romanian market is a real gift for this type of activities.

Thing also proved by the fact that great part of the banks has chosen to set up also a NBFI whose products compete with the banking ones. And it isn’t only about car leasing, but also about personal need loans. At the end of last year, the balance of the financing granted by NBFIs was amounted to 23,1 billion lei which is16% of the total of the nongovernmental credit. The weight was held by leasing with 20,3 billion lei, followed by the consumption credit, in which also enters the one from stores, with 1,9 billion lei and the housing credit - 0,9 billion lei. The experts recognize that the documents requested by the banking institutions cuts the enthusiasm of the future customers, the majority choosing to pay more than to loose their time.

Burden conditions

An income certificate and the ID are in most times, enough for receiving a quick credit of small value. The applicant doesn’t even have to leave his residence, the agent comes to him, sends the request online or by post or solves everything by only making a call. And the surprise is the short time in which the money has to be paid, in many cases 24 hours. More, nobody asks in what purpose they’ll be used. And one more thing: the debtor’s statute at the Credit Office doesn’t interest anyone. “NBFI represents the solution for a great part of the active persons which have already a loan history not quite favorable in the relation with banks. This solution is more expensive than the option of the non guaranteed credit obtained from the bank, and usually applies also to some smaller values than the sums accessible through a banking credit”, Roxana Gavrila, communication director of Credit Team précised.

All these cost however, and the bill is noticed in the final value that has to be paid back. Also, this is the only index which shows how expensive the loan is. On the sites of these institutions – where there are – the data about the final costs are hidden in terms as “conditions for every customer”. In reality, the interests are a few times higher, the commissions the same. And the transparency misses. The credit brokers say that there are also situations in which the differences aren’t extremely high.
“The interests practiced by NBFIs are for some unguaranteed products with about 5% higher than in case of banks , while the guaranteed credits have costs comparable with the ones of the banks”, also précised the communication director of Credit Team. Even so the difference isn’t at all negligible.

The most burden are by far the loans of small values, granted on short terms, for which there are required few documents. The value of the credit exceeds in few cases the value of 3.000 lei, and the credit period is of one year. Here have luck as the retired persons, as the employees with incomes equal with the minimum on economy. Only that, the value that has to be returned, is in the happiest case double against the loaned one. One of the most “advantageous” such loans is the one offered by a NBFI from Sfantu Gheorghe, Swiss Invest, which perceives an interest of 300%.

DAE 227%

To Provident, one of the companies which grant loans at residence, the maximum value depends of the number of loan contracts, at the first the value is lower and increases while the customer statute consolidates. Anyhow, 3.000 lei is the maximum limit. The request can be made also online. The money can reach to the client in 48 hours from the moment of sending the request. But when we speak about costs, things are not so simple. The installments are paid weekly and DAE (the effective annual interest) reaches also to 227%. For example, to a credit of 3.000 lei you pay after one year 5.179 lei. The weekly installment is of 99,70 lei.
To Cetelem, 40% of the credits are granted in stores, 25% on card , the rest being car leasing and personal need credits accessed by phone or e-mail. “The competition with the banks takes place because the NBFI give the advantage of reducing the documents and the granting period. In what concerns the costs, these are situated at an average level of the profile market”, Simona Tartacuta, marketing director at Cetelem IFN SA precised. For example, for a credit using just a copy of the ID, the maximum granted sum is of 2.200 lei, and DAE reaches to 28,35% for a loan period of maximum four years. And these seem to be the most advantageous conditions.

Some companies post promotions type “zero interest” and the real costs are hidden in diverse commissions. The BNR representatives say that they can’t interfere in the policy of these institutions, each establishing by itself its loaning conditions. Important is that the people to know exactly in what they are into and how much they’ll pay until the end of the contract.

"The competition with the banks takes place because the NBFI give the advantage of reducing the documents and the granting period." Simona Tartacuta, marketing director at Cetelem IFN SA