Very often, banks are often used to obtain personal loans. These are agreements through which the bank undertakes to advance a quantity of money to a person who receives the denomination of borrower. The person in question has the obligation to return that amount and also pay previously agreed interest and expenses related to the transaction.
Regarding interest rates, the options are usually presented between: fixed or variable interest. A fixed rate will always be kept out of fluctuations in market rates, while variable interest varies with the market. The choice between both options is limited to the user’s ability to cope with possible changes in debt.
In addition to repairing the nominal interest rate, it must also be done in the APR. This is a slightly more complex calculation that includes the nominal interest rate and fees that may apply to your loan, valuing the term of the operation. It is a more reliable indicator of the real cost of the loan.
Requirements to receive a loan
The financial institution will have to do a feasibility study to assess the repayment capacity of the person who wants to enjoy a loan. This is a process prior to granting the loan. The analysis includes monthly income and outstanding payment commitments and debts. What really interests them is to know if the user can meet the monthly fees without complications.
Among the documentation required to request a personal loan are: the ID of the person concerned, the proforma invoice or budget of the item you intend to buy with the borrowed money, proof of income such as the last income statement and last payrolls, the copy of the employment contract, the list of assets at the time the loan is requested, the receipt of the house or lease and payment receipts.
Fixed interest and variable interest
The benefit of having a variable interest rate is that the interested party may take advantage of the reduction of their debt should reduce market rates, but may also have to face higher payments or a higher total debt should raise the types.
With a fixed interest rate, the person receiving the loan who does not have to worry about any change in their monthly debt or bill, but may also not be able to benefit market rates should go down throughout their period of indebtedness. If you would like to be able to plan and budget carefully, or if you do not have extra money on hand to deal with possible increases in cost, fixed rate interest will be the best option for your budget.
The purpose of the loan
In general, the amount of money requested in a personal or bank loan is destined to the purchase of a specific good or service, in many occasions to help in the purchase of a car or a house. In the case of companies, we may be more accustomed to talking about credit operations materialized in lines or policies, but credit accounts must be requested to face temporary periods of lack of liquidity or cover the expenses of an extraordinary situation related to the circulating
In the case of organizations, the reasons could be several: the purchase of machinery, the purchase of transport elements, repairs and rehabilitations of work spaces, the purchase of computer equipment or the contracting of specialized services related to ordinary activity. .
There is a big difference between the guarantees required by a personal or consumer loan with respect to those of a mortgage loan, since in the latter, the main guarantee of compliance with the payment obligation is the real good that is mortgaged. This means that in case of default, ownership of the property will pass directly to the bank.
In addition to the guarantee of the property, mortgage loans are backed by the personal guarantee of the applicant. In the case of a personal loan, the collection guarantee is based on all present and future assets that the applicant has.