Group loans allow a group of people to access loans to boost their business. One of the advantages of this type of loans is that it reduces delinquency risks.
This is because if one group member cannot pay, the others can collect the remaining amount. The latter can also play against, depending on how you look at it. In this note I tell you what other risks exist when requesting group loans.
If someone is late in payment your credit history is also damaged
As it is a collective loan , if a person in the group is late in paying the total amount, the negative rating will also be for you. That is why you should always carefully select each member of the association. In other words, see that he has Good Finance and is responsible for complying with payments.
They should preferably be less members
To reduce the risk of people being late in their payments, it is recommended to opt for a small group. If the financial or bank asks 8 people to give them the credit, my advice is not to exceed the number. Thus it will not be necessary to look for “more trusted people”.
Check interest rates
As it is one of the easiest types of loans, such as online loans , these tend to have higher interest rates. Compare well , together with your group, the bank, cash or financial that has the most convenient annual interest rate.
In case some of the group members do not comply with the payments, it is good to know the penalties. This way you will know what to expect if there are inconveniences. It will always be better to take out a personal credit to a group credit if you do not have a group that you trust 100%.