MonthJune 2019

General Loan Terms – What is it?

 

  • What are General Loan Terms?
  • The distinction between General Loan Terms and Credit Terms
  • Components of the General Loan Conditions
  • Examination of the General Loan Conditions

What are General Loan Terms?

Loan Terms

The General Loan Conditions form the basis for a contract to be concluded between the Lender and the Borrower and fix these cornerstones in a mandatory written form. The addition of the adjective “general” already indicates in the name the universal character of the agreement to be reached.

 

The distinction between General Loan Terms and Credit Terms

The distinction between General Loan Terms and Credit Terms

Similar to the General Terms and Conditions relating to the granting of loans, the General Loan Conditions are a standardized text. This means that this is usually applied across providers . Accordingly, it differs from the broader concept of credit conditions. These provide information on the amount of the loan itself but also on all other facets of the individual agreement between the lender and the borrower and are determined for each individual case.

Components of the General Loan Conditions

Components of the General Loan Conditions

Two very important examples are the exact term of the loan and the decisive interest rate – these are elementary components of the entire loan agreement, but not of the General Loan Conditions. In turn, their individual points are usually kept the same in all loan agreements.

These include:

  • the contract period
  • the right of termination
  • the consequences of late payment
  • the possibilities of the remedy or a possible out of court settlement

Next they define:

  • the replacement and suspension of installment repayments
  • dealing with the Bank
  • the aspects of security
  • any claims for damages.

Note For the formulation of the General Loan Conditions, EU law in its current version applies.

Examination of the General Loan Conditions

Examination of the General Loan Conditions

Lenders are anxious that their General Loan Conditions comply with the law, because if the lender misinterprets it, the contract can be challenged at any time. Notwithstanding this, it is recommended that the prospective borrower thoroughly study the terms and conditions of the loan, as well as the terms and conditions, and review the individual formulations. Even if the application for the loan is to be made with great haste, this is absolutely advisable, in order to preclude later problems that can be avoided in advance. Such conditions also apply to lending, such as to service companies based in the European Union.

If you need short term money to bridge a financial bottleneck or pay a specific bill on time, make the right choice with a Express Loan. The provider works reputable, fast and reliable, so you receive the feedback and possibly also the payment on the day of your request. A bank loan is recommended due to the many disadvantages nowadays only for large investments.

How to choose a cash loan – 7 tips

“0% commission!”, “2 months without installments!”, “Credit decision in 15 minutes!” – we are shouting for ads from banks offering cash loans. Which one to choose, since everyone assures that their product is the best? The answer is not easy and depends on many factors.

Let’s start with the fact that there is no “perfect” loan that meets the expectations of all borrowers at the same time. In each advertisement we find information that the presented data refer to a specific case, and the final conditions depend on the individual credit decision. The Bank undertakes it based on the amount of the liability, the proposed financing period, and also analyzing the creditworthiness and creditworthiness of the potential applicant.

Credit credibility

Credit credibility

Banks, when estimating credit risk, are always prepared for the worst case scenario. Credit analysts do not exclude situations where the borrower may refuse partial or even full repayment of the liability. The lower the risk, the lower the loan costs. Therefore, often the more attractive financing conditions can be counted on by the existing client of a financial institution, because the bank has an insight into the history of its ROR account, savings account or credit account. It would seem that it is not a big deal, but it is very valuable information from the point of view of a potential “donor of capital”.

New customers are checked more meticulously. For higher amounts, a statement of income is not enough, but a proof of earnings issued by the employer is necessary. The bank also checks the credit history of the potential client. Lack of credit history or information about untimely repayment of existing liabilities, have a negative impact on the cost of credit, and in extreme cases, result in refusal to grant a loan.

Retrodatabase credit history

Retrodatabase credit history

Information on a person’s credit history is collected from the Bank Register System maintained by the Polish Bank Association and from the Credit Information Bureau. At Retrodatabase there is information about current loans and credits (including credit cards and account limits) taken in banks and Spółdzielcze Kasy Oszczędnościowo-Kredytowych. From the records of Retrodatabase, the financial institution learns how the debt service has been carried out from the moment of submitting the credit application until its full repayment. Data on the loan, which was repaid with troubles, are stored for up to 5 years from the time of its repayment.

The better the history in Retrodatabase, and hence the higher the score (the so-called scoring), the better the terms of the cash loan can be obtained. For those who regulate their liabilities fairly, it is advantageous to consent to the processing of information in Retrodatabase even after paying the liability. The lack of credit history has a negative impact on the assessment of the client’s creditworthiness. It is an “unknown case” for banks.

Verification of the BIG register

Verification of the BIG register

A separate issue is checking the potential borrower in the Economic Information Bureau’s registers, where there are information on debts to utilities suppliers (electricity, gas, water), telephone or television services and companies from many other industries. BIG cooperates with a huge number of entrepreneurs who enter their debtors into their registers and check potential contractors to reduce the risk of cooperation with unreliable persons.

The entry is removed only after the payment of the debt, and the information about this fact should be forwarded to the one who applied for entering the debtor in the register. Therefore, before submitting a loan application, it is worth checking your data in BIG, because the person visible in his registers is treated as insolvent or unreliable.

Creditworthiness

Creditworthiness

Creditworthiness is a completely different matter. For its definition, the lender compares the income of the loan seeker with his expenses. It is about all fixed expenses (eg rent, electricity, gas, telephone, television, car use costs), but also maintenance costs (eg food, clothing, etc.), which each bank estimates according to individual rules and incurred liabilities, i.e. loans. There are also limits on credit cards and the amount of debit limits in the account.

The condition for granting the loan is, of course, a surplus of income over the amount of the installment that the customer would repay by taking out the loan on the conditions requested (the amount of the loan and its repayment time). The more stable the source of the customer’s income is, the higher the surplus of earnings over the expenses is higher, the greater the chance for attractive loan terms. Before starting the effort for a cash loan, it is worth closing the unnecessary limits on the account or credit cards, or at least reducing their amount, in order to improve their creditworthiness.

Installments and credit holidays

Installments and credit holidays

Talking to a loan advisor, you can expect questions about the type of installments – fixed or decreasing, and with the proposal of “credit holidays”. In the case of fixed installments, the amount of the lender refunded each month is the same throughout the entire loan period. Declining installments is a situation when the first payments are high and then gradually decrease as the capital that remains to be repaid and from which interest is calculated. The first solution means an even burden on the home budget, and the second is certainly associated with greater sacrifices in the first period.

“Credit holidays” are sometimes advertised with the slogan “buy today, start paying back the New Year”. It sounds encouraging, especially when the loan repayment begins in a few weeks or months. It’s just that such a cash loan is more expensive. The interest due for the period in which the loan is not repaid is simply assigned to subsequent installments and can not be seen at all. There are also variants when the capital is later repaid, but the interest due is paid from the beginning of the loan period.

Cash loan – assessment of the bank’s offer

Cash loan - assessment of the bank

Efforts to start with a cash loan should begin by considering a number of factors – what installment can be repaid without ruining the home budget (this affects both the loan period and the maximum loan amount we can apply for) and how quickly we need money. When money is needed “for now”, you need to seek support in non-bank institutions or in those banks that provide loans on simplified terms. It should be remembered, however, that you can count on smaller amounts and generally on slightly worse conditions.

The basis for the assessment of the proposed loan is a meticulous analysis of its terms, or related costs. The regulations precisely specify that the bank should provide the potential borrower with, among others, interest rate, amount of margin, amount of insurance (if related to the loan), amount of the Actual Annual Interest Rate (APR) and the total amount to be repaid.

Not only interest

Not only interest

A low interest rate does not always mean the most attractive cash loan. The bank may reduce the interest rate, but instead apply a higher commission for granting the loan. In turn, a low commission may require the purchase of compulsory insurance (for example, for life, for job loss, total incapacity to work, etc.).

It happens that the bank offers attractive loan parameters provided that it uses other of its products, eg ROR account, credit card or account limit. It happens that these additional products in the first period of cooperation are free or run on promotional terms, but later it may turn out that the profitability of these solutions is highly debatable.

Actual Annual Interest Rate

Actual Annual Interest Rate

A good tool to compare the attractiveness of a loan is the Actual Annual Interest Rate (APR), in which all costs related to the loan are included. The higher it is, the more expensive the loan is. Comparing the APRC makes sense only for loans with the same amount for the same period, as the price of money in a given period is also taken into account for its calculation. You can also compare the total amount of the loan, which is the sum we will have to pay to the bank.

When making all comparisons, one should remember about any costs that are not directly related to the loan, and therefore are not included in its price (it does not include the APRC or the total cost of the loan), but may be a condition for granting the loan on promotional terms, i.e. the mentioned costs keeping a ROR account, credit card or other banking products.

How to apply for a loan in the Czech Republic

Nowadays, most of us live so fast that it is often impossible to find free time between work and other duties in order to bring what does not push us. The 2014 article, published in The Economist in the UK, predicted that in the future, working time would be shorter and we would have more free time. And while we have witnessed many technological advances that have promised to help us automate our lives and reduce our time at work, we seem to be increasingly busy.

Have everything done

Have everything done

Imagine the following model situation. Your partner’s family has been coming to visit you for the first time on a weekend visit since you moved to a common place. Both of you have been planning for months to get rid of all the unnecessary things and boxes in the other room and turn it into a guest room, yet you find that time and money are a luxury you can’t afford. Now, however, you have to do this unpleasant activity, so you decide to take a short-term loan to help fund this project.

Visit the bank

Visit the bank

The next day you go to the bank to see what your options are. Ten minutes you are looking for a place to park and when you finally get in, you will wait at least another thirty minutes before anyone takes your time.

Then, twenty minutes later, you discuss what loan is best for you, and you are asked to prove your income as well as tax returns.

Of course, you do not have these documents with you, and they will probably not be found anywhere at home. So you spent an hour at the bank, you go home to find the required jacks, and if you succeed, the same process awaits you from scratch.

But if the time before your family arrives is dangerously approaching, the option described above may not be the right one for you. There must be another solution. And it exists.

Loan online

Loan online

Whether you are busy and still need money quickly, we are here for you. With Ferratum Money, asking for a safe short-term loan has never been easier. You can apply for it non stop online, without unnecessary administration and without waiting.

For we know that when it comes to short-term financial assistance, time plays an important role. Therefore, our goal is to provide the fastest, best and user-friendly banking services.

A loan application takes just a few minutes and our automated technology allows loans to be approved in just a few seconds. We then send money the same day.

So what are you waiting for? Make your life easier with our online loan.

© 2019 cabinglobal.com

Theme by Anders NorénUp ↑