Before you take out your loan

Home Credit’s aim is to provide our services to properly informed and instructed clients. So this is where you can learn about the principles of responsible lending. Here you can find useful advice and answers to questions that may arise before you take out a consumer loan.

I would like to purchase an item, but I cannot do it without a loan. How do I decide if it makes sense, if I can afford it?

If an appliance breaks at your home and you do not have enough cash on hand to buy a new one, installment purchase is one of the ways to solve the problem. But you have to pay for borrowing money. Before taking out a loan, do the math and calculate thoroughly what amount out of your budget you can regularly expend on the repayment of the loan.

Tip: Consider if you really need the item urgently, if you can afford it, or if you can postpone the purchase.

How do I choose from the broad range of offers?

First, consider honestly how much you need for your plan. Immediately after that, ask yourself how much you can repay every month. It is important to make sure that the installment is not an overly demanding burden on your family budget.

Tip: Choose the product that best matches your requirements and familiarise yourself thoroughly with the terms and conditions of the loan agreement.

How do I tell if a loan is advantageous for me?

Once you know what size of loan you need, compare as many offers on the market as you can. Take into consideration the APRC, interest rate, term of repayment, and amount of individual installment as well as the possibility of insuring the product and other expenses such as ATM withdrawal fees.

Tip: Navigating financial terminology precisely can be difficult sometimes. If you don’t know, seek advice on how to compare the various products on the market. You can, for instance, contact a consumer protection association or search for the definition of a given term on the Internet.

I was told to be especially careful about the amount of the APRC. Is this true?

APRC or the annual percentage rate of charge is a parameter that expresses the financial demands of a loan. The figure reflects the costs associated with the loan, i.e. the interest rate, charges etc. However, certain items are not included in the formula, which the law governing certain terms and conditions for arranging consumer credit permits.

Tip: The amount of the APRC is not always relevant. In addition to this parameter, be sure to also calculate how much money you will in fact pay for the entire loan, or consider other parameters of the products offered. Choose your loan based on that.

I compared two loan offers – one was more advantageous at first look, but when I calculated everything, I found out that the opposite was true. How come?

It is possible that the more expensive product had lower basic (“visible”) parameters but higher additional (“hidden”) costs – various administrative fees for the provision and administration of the credit account, monthly statement, charge for early repayment, etc.

Tip: Look for these additional costs before signing the agreement. As the individual items, these need not be a lot of money, but in aggregate they may increase the total loan costs considerably.

Agreements are hard to understand; I cannot make them out. What should I do?

Any agreement must be executed in writing, and of course you should receive one counterpart. Before signing it, you are entitled to study the agreement in detail. Make sure that it contains, among other things, the following items:

• The figure of the interest rate and the APRC
• The conditions on which the interest rate and/or APRC can be changed
• Period of repayment
• Maximum amount of the consumer loan
• Definition of the individual payments
• Payment method
• Conditions under which the agreement may be terminated
• Provisions on the right to repay the loan prior to the specified maturity of the loan
• Obligation to inform you about any changes concerning the interest rate and other parameters (e.g. amount and number of installment, date of maturity, etc.)

Tip: Do not give up on your right to study the agreement thoroughly. Even if the other party insists, take enough time to read the agreement. If you feel you do not understand certain phrases, ask for an explanation. You are committing to repay a loan regularly, often for a number of months – so you must know what situations can occur in relation to the loan you drew.

What should I be careful about when reading the agreement?

First check your personal details (residence address, birth registration number, telephone number, etc.). Make sure that the agreement lays down those parameters of the loan that you agreed on with the retailer (or other person arranging for the loan). Should you find anything strange, ask for an explanation.

Tip: Do not skip the fine print – it is boring to read but you have to familiarise yourself with it, as it can contain important information.

What conditions do I have to meet to obtain the loan?

General conditions usually include being over 18 years old, Chinese citizenship or at least permanent residence in PRC, and proving identity using at least two valid documents. The general rule is: the higher the required amount, the stricter the terms.

In addition, every financial institution uses scoring – reviewing the client based on certain parameters. This is done to calculate the probability of the client being capable of honouring his obligations. The higher the score, the more likely it is that the client will actually obtain the loan.

Tip: Do not try to circumvent the terms and conditions for obtaining a loan – give the credit company truthful information about yourself. The submission of forged documents can be rated as a crime with all of the negative consequences.

What are the “General Terms and Conditions” (GTC), where can I find them, and what are they for?

General terms and conditions form part of the agreement and contain the rules that govern the relation between the service provider and the client. If you are entering into a loan agreement, be inquisitive about the GTC as well, because they contain important information that you definitely should know.

I used to owe a couple of thousands to an installment company years ago. I know they entered my name in the registry of non-payers. Can I obtain a loan today?

Every company has different conditions, but generally any record in the database could be to your detriment in the process of loan approval. If you owed money many years ago, the entry about you may have been deleted.

Tip: If you want to be sure whether or not your name is in the database, contact the specific registry. To obtain a database extract, you typically need to submit a written request and pay a fee.

My income is very different every month, depending on how well I fare at work. Can I still take a loan?

As long as you are able to fulfil your obligations every month, you should encounter no problems with your loan application. In your case, you need to consider all of the pros and cons and to be able to manage your money well. Your expenditures should be roughly equal for every month. This way, you will avoid difficulties during weaker months.

Tip: Make a reserve amounting to at least two installments. It will help you to weather the period when you would be left without money enough for the installment in some of the months.

Can I withdraw from the executed loan agreement?

The current legal provisions enable you to withdraw from a loan agreement only where you entered into the agreement remotely or outside of the financial institution's points of sale. In such a case, you do not have to give grounds; just withdraw from the agreement in writing within the statutory period (usually 14 days after execution) and cover any claims that may have come into existence in the period before the withdrawal. In other cases, it is only possible to withdraw from the agreement if this option is expressly agreed by and between the parties, and only under the agreed conditions.

Tip: Withdrawal from the agreement can be complicated, and in certain cases it is not possible at all. We recommend you to carefully consider if you really need the loan before executing the agreement.

How can I minimize fees for the loan?

First, consider if you need the loan at all. If you do, only take out a loan in the necessary amount and pay the obligations arising from it duly to ensure that the amount due will not increase because of penalties.

Tip: Choose the type of loan with parameters that best match your requirements. Use the benefits it offers and try to avoid any additional payments.

I am 59, with 4 years left before retirement. Can I still obtain a loan?

18-55 are eligible age range for HCC loan

If I buy an item in installment and the product breaks down, do I still have to pay?

In this case, you continue to repay your loan. Buying something and borrowing money to do so are two different things. The credit company only lends you money to buy a product; it does not guarantee its quality to you.

Tip: If you have any problems with the product, you should directly contact the retailer you bought the item from. During the warranty (defined by law or adopted by the retailer), the retailer is obligated to settle a justified complaint free of charge in any of the methods defined by law (e.g. by repairing the goods, replacing it with new goods, or refunding the money).

Does it pay to consider insurance along with a loan?

The possibility and the terms and conditions of insurance may be a major factor influencing your final decision on which loan to take. Insurance can mitigate the negative impact of financial shortfall, which you might encounter during the repayment. Your best choice is to take out insurance along with entering into the loan agreement. The most common insurance is payment protection insurance, with alternatives differing in terms of the risks covered or not (e.g. disability as a result of injury, etc.).

Tip: Insurance gives you more assurance that you will be able to meet your obligations. However, ask for detailed information on what the insurance includes and covers before signing the contract. This way, you will have the insight to avoid any possible unpleasant surprises.

What would I have to do should I face unexpected problems and become unable to repay in the end?

If you approach it responsibly, even such a situation will have a solution. Contact the customer service line and explain your situation. The most important principle is: communicate, tell the truth, do not dodge, and do not put the resolution off.

Tip: Never take any other loan from another provider only to be able to repay the former loan. More likely than not, you will get into even more trouble that way.