AZE.US
Loans have become easier to access in Azerbaijan, but experts warn that many borrowers in Baku and other parts of the country still take on debt without properly calculating whether they can repay it.
Economist Asif Ibrahimov told Demokrat.az that one of the most common mistakes is borrowing an amount that does not match a person’s real income or family budget.
According to him, many people focus only on the monthly payment. They often ignore the full burden on the household budget, possible unexpected expenses and future financial risks. This can lead to late payments and problem loans.
Another common mistake in Azerbaijan is the excessive use of consumer loans.
Ibrahimov said buying expensive mobile phones, luxury household appliances, costly furniture and other consumer goods on credit is rarely a sound financial decision, especially when those items quickly lose value.
“Unfortunately, some citizens spend a large part of their monthly income on products that rapidly lose value. As a result, the loan obligation remains, while the purchased product loses both its price and relevance over time,” Ibrahimov said.
He said borrowers are often influenced by social pressure, advertising and the image-driven culture shaped by social media. In many cases, people in Baku and across Azerbaijan buy expensive goods not because they truly need them, but for status or appearance.
The economist said a loan can be useful when it is directed toward something that generates income or increases human capital, such as education, business development, professional skills or long-term investments.
But consumer borrowing for quickly outdated goods can create a long-term burden for families.
Ibrahimov also listed other frequent mistakes: taking a new loan to repay an old one, failing to read loan agreements carefully, not having an emergency financial reserve and borrowing from several banks at the same time.
He said the main question before taking a loan should not be: “Can I get this loan?”
The real question, he said, should be: “Can I comfortably repay this loan?”
Ibrahimov warned that loans taken without financial discipline and planning can damage both the family budget and a citizen’s financial reputation.
“Today, many people direct future income toward current consumption. But loans produce better economic results when they are used for income-generating activity, education, business or investments that create long-term value,” he said.
AZE.US