Credit is a system of economic relations in connection with the transfer from one owner to another for temporary use of values in any form (commodity, money, immaterial) on the conditions of return, urgency, payment. To find the relevant bank, go to the Credit Karma website.
The following forms of loans are allocated to the main groups of borrowers: individuals (citizens) and legal entities (companies, organizations).
By purpose, bank loans can be of various types: for example, consumer credit, mortgage, car loan.
Consumer credit is provided both in the form of bank credit (loans for consumer purposes) and in the form of commercial credit (sale of goods with deferred payment). By the way, on the Credit Karma website, you can choose a bank with suitable lending conditions based on your credit history.
There are various types of loans, in which the provision of collateral is a mandatory condition. These include: mortgage, pawnshop, car loan, etc.
A mortgage loan is the provision of cash under the conditions characteristic of a loan, secured by immovable property (land, housing, etc.).
A pawn loan is a short-term loan in monetary form secured by easily realizable movable property (as a rule, decorated with jewelry).
A car loan is a targeted loan. The purpose of providing the funds is determined immediately — this is the purchase of a car, and the client will not be able to spend the money on other purposes, since the transfer of funds to his bank account, and even more so, the provision of a loan in cash, is not assumed. With a car loan, banks accept the purchased car as collateral.
Loan repayment methods: annuity or differentiated.
Annuity repayment is debt repayment in equal shares.
In this case, the borrower pays a monthly payment equal in amount, which includes the amount of accrued interest on the loan and the amount of the principal debt. Annuity payment is calculated using compound interest.
Differentiated repayment is repayment with payments decreasing from the balance. This is a payment that involves the payment of the entire amount of the principal debt in equal parts, which are increased by the interest accrued on the balance of the principal debt. On the Credit Karma site, it is possible to choose a bank with the most suitable conditions based on your data.
Therefore, when issuing a loan, the client must pay attention not only to the interest rate, but also to other details. For example, on the type of loan payments.
The main principles of lending: repayment, urgency, payment, differentiation.
Return – the loaned values in a pre-arranged form (credit agreement), most often in cash, will be returned to the seller of the loan (creditor).
The principle of payment of the loan means that the borrower must pay a certain one-time fee for using the loan or pay within the agreed period.
The term of the loan means that the loan must be repaid within a strictly defined period. The maturity of the loan is a necessary condition for the return of the loan. The term of the loan determined by the contract is the time limit for the borrower to have the funds. Violation of the deadline distorts the essence of the loan, it loses its original purpose. On the Credit Karma website, you can choose a bank with various loyalty programs.
The principle of differentiated credit means a different approach to borrowers depending on their real ability to repay the loan. The principle of a differentiated approach to borrowers, depending on their real possibilities to repay the loan, presupposes the division of borrowers into prime and doubtful ones. Within these groups, more detailed differentiation is usually applied using the credit rating system. Within credit ratings, debtors are differentiated in sufficient detail, taking into account a whole set of criteria.
In the following articles, we will analyze the topic of lending in more detail. In the meantime, follow the link to the Credit Karma website. There you can choose a bank relevant to your credit history!