Interest rates on consumer loans will remain high, so the National Bank of Ukraine issued recommendations on how to avoid a debt trap when taking out a loan. About this informs director of the Department of Financial Stability of the NBU, Pervin Dadashova.
According to Dadashova, the total level of indebtedness of the population to banks and non-bank financial institutions is currently about 10% of citizens’ incomes. In her opinion, this does not indicate an excessive credit burden, but a gradual recovery of lending as a sign of increased consumer activity.
She noted that the level of retail lending in Ukraine has fallen from 4% to 3% of GDP since the start of the full-scale invasion. For comparison: in 2014, this indicator reached 10%. At the same time, despite the overall positive dynamics, some borrowers may face excessive debt pressure.
Dadashova shared tips on how to avoid such situations:
- carefully familiarize yourself with the terms of the loan, in particular with the repayment term, interest rate and commissions – both on the creditor’s website and directly in the contract.
- correlate the amount of the loan and the cost of servicing it (interest and fees) with your monthly income.
She emphasized that in conditions of stable and low inflation rates may decrease over time, but noted:
“However, even in EU countries, unsecured consumer loans are usually more expensive than, for example, mortgage loans. Therefore, when taking such a loan, you should first of all count on your financial ability to repay the debt.”
We will remind that on January 27, 2025, the head of the National Bank, Andriy Pishnyi, announced that in 2024, the net loan portfolio of banking institutions for the public increased by 62 billion hryvnias, or by 39%.
