Hitelkör

Hitelkör is a Hungarian term that translates to "credit circle" or "loan circle" in English. It refers to a form of informal financial group where members pool their savings to provide small loans to each other. These circles typically operate on a rotational basis. Each member contributes a fixed amount of money regularly, and in turn, one member receives the entire pooled sum for a set period. This cycle continues until all members have had a turn receiving the loan.

The primary purpose of a hitelkör is to offer an alternative to traditional banking services, particularly for individuals who may have difficulty accessing loans through formal channels due to low income, lack of credit history, or other factors. They provide a way for members to access lump sums of money for various needs, such as starting a small business, covering unexpected expenses, or making significant purchases.

Hitelkörs are often based on trust and social connections, with members usually knowing and trusting each other. This informal structure simplifies the lending process and eliminates many of the administrative costs and interest rates associated with conventional loans. However, the success of a hitelkör relies heavily on the commitment and reliability of its members. A defaulting member can disrupt the entire system for the rest of the group. While not a formal financial institution, the concept of the hitelkör highlights the importance of community-based financial support systems.