Installment is an interest-free loan for a buyer, which is issued to pay for a specific product or service. Installments allow pick up the goods now and start using them, and spread the payment over a long period. This is a good way to buy expensive goods, for example, household appliances, furniture or even groceries. That is why Kazakhstanis are so fond of shopping with the help of an interest-free loan.
Accumulation of debts
Constant use of installments can lead to accumulation of a large amount of debt, when most of the income goes to mandatory repayments of obligations to banks. If you do not monitor your obligations, it is easy to lose control over the amount of debt and go bankrupt.
Reduction in financial flexibility
Constant monthly installment payments reduce available income, and in the event of illness or loss of work, a person may face bankruptcy. Besides, paying bills deprives people of the opportunity to save up for the purchase of a home or car.
Fines and penalties
Late payments on installments can lead to the accrual of fines and penalties, which increases the financial burden and worsen the credit history.
False sense of financial security
Installment purchases can create the illusion of availability of goods and services, which leads to excessive spending and impulsive purchases. There is evidence that such financial instruments can push people to impulsive purchases of luxury goods that bank customers do not need.
Source: https://prodengi.kz/post/pocemu-k-pokupkam-v-rassrocku-nudno-otnositsya-vnimatelno
Photo is from open sources.
