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Loans in Serbia – in dinars or in euros; advantages and disadvantages

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The growth of Euribor is no longer a new thing and even the greatest economic experts cannot say and guess how much more it will grow. It is precisely this uncertainty that worries citizens who have loans or are just planning to borrow. This is not surprising considering that they already had an unpleasant experience with loans that were indexed in Swiss francs. As they state on the financial portal „Kamatica“, this example alone could sway most people in the future when taking loans that are indexed in foreign currency.

Nevertheless, people still take loans that are indexed, usually in euros, and most have no problems with repayment and nothing dramatic happens to them during loan repayment. The reason is that banks generally offer more favorable interest rates for loans that are linked to some foreign currency, so this usually attracts people to decide to buy that particular loan – they state on this portal.

When asked whether it is worth taking a loan that is, for example, indexed in euros, or whether it is better to stick to dinar loans, they say that it is a personal decision, but that their advice is to be well informed about everything before making a decision. Loan details and comparison of offers from several banks. Only in that case, they say, will they have a chance to choose the most favorable cash, housing or refinancing loan.

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If they opt for a loan that is linked to a foreign currency compared to dinar loans, they need to pay attention to several things. If they take out a loan with variable interest, they should find out how often the installment changes. Then they should inquire about the movements of the exchange rate of the currency in which they want to take out a loan in the recent past, as well as what are the forecasts for the next period – they say from “Kamatica”.

They add that consumers should inquire about the buying and selling rate of that currency in the bank where they plan to take a loan, because banks often do not have the same exchange rate as exchange offices, given that they do not have to adhere to the official mid-rate of the NBS. And finally, financial experts advise, if their earnings are linked to a foreign currency, which is not particularly common in Serbia, it would be good to ask the bank if there is a possibility that the loan is linked to that currency.

Financial advisers say that in the case of a loan in dinars, the advantage is that no participation is required, regardless of whether it is a cash or car loan. Then, there is no danger of the value of the euro rising – the loan is taken in dinars and returned in dinars. Therefore, the movement of the euro exchange rate has absolutely no influence on the war.

The disadvantage of this type of loan is that the interest rates are high. When it comes to euro loans, apart from the lower interest rate, the advantage of this type of borrowing compared to dinar loans is that the total amount that the client pays back in the form of interest for the entire period of the loan is significantly smaller. On the other hand, participation is mandatory and the client has the risk of a jump in the euro (if it is a euro loan), because the installments are paid in dinars, but are linked to the euro exchange rate.

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According to the current regulations in Serbia, all loans, even those related to the euro, are always paid and repaid in dinars, not in foreign currency. Loan indexation in euros means that the loan repayment plan is made in euros, but the installments are settled in dinars, at the middle exchange rate of the National Bank of Serbia on the installment due date.


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