Baby loan instead of payday loan?
Nowadays, many people have fallen into need of forgetting personal loans for married couples because it is worthwhile to borrow a baby loan even if they do not want a child.
I have already described the details of the loan here:
Details of the publicly supported $ 10 million loan
Why is it better than a personal loan even if you don’t want a kid?
On the one hand, this money is expected to be dispensed with by banks without any substantial credit assessment, as they will not be interested in how much the customer will be able to pay the repayers with a state guarantee. On the other hand, very few banks give 10 million forints to very few people as personal loans.
There is a lot of writing out there, how good it is for everyone to take out a loan if they want a kid or not. They also calculated how much it was worth.
If you take five million for nine years and now you get 2% yield on five-year government bonds, then you only have to pay back $ 680,000 immediately and then the personal loan runs at 8%, which is not that much at current market rates. (Five million and nine years because the monthly repayment can not be more than 50 thousand forints.)
Here comes the trouble
On the one hand, people will not stop at 5 million forints, they will take the whole amount for twenty years. Found some money, we’ll spend it, and it will be somehow in five years.
However, they will then have to pay nearly $ 1.4 million in one installment in five years.
The big question is, why? The one-time borrower will not put that much money in reserve over a five-year period.
And the next concern is that for the remainder of the term, the interest rate on your loan will be 130 percent of the 5-year government bond yield.
If you only get as much interest on government securities as you have in five years, you will have 11.5% interest on your loan. If you look at yields for 11 years (10 years high because of the crisis, I dare not say), your interest on the loan would be 16%.
And the funniest thing is that after a short search you can still find a 7-10 year old personal loan with a 8-9% fixed rate. So if you are creditworthy, you will gain nothing by borrowing that baby-loan instead and risking it big because you have to repay the interest subsidy in one amount and you have no idea what your interest rate will be after five years.
And if you are not creditworthy
You will not get a normal personal loan and I would not take it in your place because you will have to repay it too.
I would even be afraid to take this credit without necessarily having a child. Because, unfortunately, it’s not sure if I really want a kid.
If you listen to me, then go apply for this credit if you are sure you can have a baby. Even so, think about whether you need it and you can repay it and pay your monthly installments every month. If so, only pick it up, but definitely because it is worth the interest-free loan, even if you only subscribe to it in premium government securities for a few years or decades.