Maybe some people are already familiar with the credit facilities without collateral (KTA). This type of debt is considered as a way out to get cash quickly, whether shopping for personal spending or business. KTA is chosen because it is considered not complicated, you do not need to have asset for applying for loans, and the process is fairly quick.
The consumerism of people is what sustains the popularity of KTA. The bank is also active in heavy advertising of this, it’s promotion billboards flooding public spaces. At least the Financial Services Authority (FSA) regulates the financial services promotion via text message on your mobile phone so that you are not bombarded with unwanted texts.
Of course, before asking for KTA, it’s good to have an adequate knowledge of what and how KTA use it. Well, in the world of borrowing money, KTA gives unsecured debts, with no guarantees of repayment. Banks are in a risky position disbursing these types of debt because creditors do not pledge a valuable asset. If there is a problem in this debt, then the banks get ready to bear the great loss.
Then what is the banks incentive to offer KTA, especially if it’s not about profit? Because in the investment world, the rules of the game are: ‘risk is always proportional to the prospect of profit’. That is, banks would prefer to take that risk in order to benefit greatly.
Obviously they benefit from the imposition of interest on KTA, with the argument that the risk of large banks in the provision of this KTA type, then it becomes reasonable if the interest charged is greater. Anyone who takes the KTA must be prepared to realise that their debt is more expensive because the creditor (bank) is in high risk.
Although the imposition of interest is high, some are still interested in taking KTA. These are often more practical and easy to apply for, you will receive the funds you asked for quickly, and you are free to determine the instalment period.