Credit Policy in Eastern Croatia

Poor economic and social conditions throughout Croatia have had a negative impact on lending to citizens. First of all, there was an increase in unemployment and a decrease in salaries and pensions.

If we take into account the ABC statistics, Eastern Croatia is the leader in terms of the number of unemployed persons, which calls into question the existence of citizens and, consequently, the proper fulfillment of their credit obligations. Statistics show that the average salary in Slavonia is 17.00% less than the national average salary, which is just over USD 5,200.00.

Inability to pay overdue


Problems affecting citizens in Eastern Croatia are transaction account lockouts caused by the inability to pay overdue obligations such as overheads, current account overdrafts, loan installments and the like. A large number of credit-laden people also have loans in Swiss.

It is known that in the previous years, favorable loans with a currency clause were placed in “stable” USD whose interest rate ranged between 3.50% and 4.00%. At that time, CHF 1.00 averaged $ 4.90. In 2010, the franc began to rise sharply and crossed the $ 7.00 limit.

Accordingly, interest rates on loans also increased. Consequently, loan rates in francs have increased by over 50%. All of the above led to a disorder in payment of arrears.

In order to overcome the “payment crisis” as easily as possible, citizens are reaching out to new tasks or reprogramming old ones. Numerous bad placements already lead to increased caution among banks when placing new loans. The prolonged recession has contributed to the inertia of the banking system, which is less and less prone to lending to citizens and the corporate sector.

Reprogram commitments


In the first half of 2013, most banks in the region of Eastern Croatia, in their credit lines, also offered the possibility of settling foreclosures on citizens’ transaction accounts. In the second half of 2013, banks tightened the conditions for lending to citizens, so the closure of foreclosures can be realized with the loan of only a few banks.

The goal of credit-default citizenship is to refinance existing obligations; closing loans and debts on cards or current accounts and paying only one installment of credit that will be deducted from salary or retirement. For this reason, the non-purpose loan amounts were increased to USD 30,000.00, and the repayment period itself was extended from 10 to 15 years.

One of the options for rescheduling liabilities is a mortgage loan . A mortgage loan is a non-purpose loan that entails registering a mortgage on the property as an additional security instrument and allows for a longer repayment period of up to 25 years. The mortgage interest rate ranges from 7.75% to 10.20%.

It is important to note that the ratio of real estate value to loan amount ranges between 1: 1.5 and 1: 2.0. Mortgage loans are a good option for debt rescheduling in excess of $ 30,000.

Loans to “balance” usually with CPI

Loans to "balance" usually with CPI

If it is not possible to refinance all loans, citizens usually reach out for loans ” for the remainder of the proceeds .” Such lines of credit are interesting because they do not require repayment of existing loans but allow faster cash flow to facilitate the payment of current liabilities.

It is important to note that with these lines of credit, banks require contractual payment insurance or credit payment insurance (CCI) to further protect themselves when collecting their claims. Popular loans for the remainder of the income range up to USD 25,000.00 with a repayment period of up to 8 years.

With these loans, the baseline for life is on average 1.500 USD. Because these lines of credit represent a high risk when collecting receivables, banks usually choose regular clients for such loans and do not close foreclosures.

Repayment up to the age of 78

Repayment up to the age of 78

Due to the large number of pensioners in the region of eastern Croatia, it is interesting to note that certain banks have extended the age to which it is necessary to repay the loan. Retirees can apply for loans up to $ 10,000.00, and they have to pay off the loan up to 78 years of age.

The maximum repayment term for such loans is 10 years. For persons under 85 years of age, loans up to USD 3,000.00 are offered with a repayment period of up to 3 years.

Minor clutter is usually not a problem

Due to the inability to repay loans and other liabilities to banks on a regular basis, many clients were blacklisted , which represents a mess in the credit report. Credit reporting irregularities are usually not an obstacle to obtaining a loan, of course it depends on why the client is recorded as untidy and what is the amount of the outstanding debt. Certain banks in the area of ​​Eastern Croatia will most often settle their credit report with a new loan.

Unfortunately, the problem is if the client does not meet his obligations in the long run, which results in the cancellation of the credit agreement, credit card or cancellation of the overdraft facility. In the case of such deficiencies, banks will most often seek a guarantor or co-debtor for the purpose of supplementary insurance.

Finding a guarantor or co-debtor is a problem for most citizens. Usually, we are faced with the fact that a large number of citizens are over indebted and therefore unable to jointly guarantee the loan.

What awaits us in 2014

Given the CNB’s projections, we can expect a further decline in household lending . The amendment to the Consumer Credit Act will reduce the rate of existing loans in Switzerland, which will certainly have a positive impact on the large number of credit indebted citizens.

The law also limits interest rates on housing and consumer loans, and when contracting variable interest rates, the parameters for changing the contracted variable interest rate must first be defined. I believe that all of these decisions will contribute to business transparency and better informed citizens when deciding on new credit facilities.

The new Ordinance on income tax will allow the write-off of credit institutions’ claims on citizens based on home loans, and the cancellation of uncollectible tax debt for socially disadvantaged citizens who are unable to meet their obligations to both the state and banks.