When people want to buy a home or vehicle, start a business or face an emergency, they sometimes need large amounts of money in short time and what they earn is not enough. In such cases, they can use their savings but if they do not have enough, they must borrow it.
Banks and other enterprises offer loans for different terms, from a month to decades. In Lithuanian language, loans are called paskolos. Process and conditions of applying for one in Lithuania are not much different from those in other EU countries. People who have had a loan before but failed to repay it have lesser chances of getting a new one. The lender might require a proof that you have a job or another reliable income and in some cases, you have to pawn something or have another person pledge he or she will repay if you cannot. The higher the amount borrowed is, the more such security measures there are. Time needed to approve or reject an application will also increase as the bank inquires about the applicant’s history and income.
Especially for people who take loans to pay for everyday expenses, repaying it can be excrutiating and sometimes makes things worse. For those, it is helpful if the lender allows them to stop paying for a few months.
If the borrower dies or becomes unable to work, the family, for whom this is a sad event in any case, has an additional problem. Particulary if that was its primary wagewinner, it can be unable to repay the debt and go bankrupt. Therefore, it is recommendable, at least for older and less healthy borrowers, to buy an insurance that will refinance their credits in such cases.