What is credit?
What if there is no available money in the budget, and you urgently needed to buy something? For such cases, mankind long ago came up with a loan.
What is a debit and credit?
To understand what a loan is, you need to deal with such concepts as debit and credit. Both these terms came to us from accounting.
Debit is called the left side of the accountingaccount. Increasing the debit for active-passive and active accounts means an increase in the organization's funds, an increase in passive accounts - a decrease in the organization's own funds.
Credit, is the right side of the accountingaccount. The increase in the credit on active-passive and active accounts indicates a decrease in the value of property rights or property of the organization. Passive accounts, respectively, vice versa.
Simply put, the more you borrow, thethe more you give. It is on this principle that credit is built. In active accounts, a loan is an expense, and in a passive account, a parish. In passive accounts, debit is an expense, and in active accounts, the arrival.
What is consumer credit
In the modern world, the most commonly usedform of consumer lending. In fact, this is any loan that meets the consumer needs of the borrower. Consumer loans are divided into "classic" (get cash in a bank or buy a thing right in the store), car loans and mortgages.
A consumer loan can be taken for any period of time: from a month to several years.
Most often, consumer loans are accompaniedAdditional fees in the form of insurance or commissions. They increase the total cost of the loan, and therefore its interest rate. Therefore, before signing a loan agreement, it should be carefully studied.
What is a mortgage?
The term "mortgage loan" means that the bankgives out money, on the security of property. In modern Russia, most often this property is an apartment or a house, which the client buys for the money issued by the bank. Simply put, if you can not return the loan that was taken to buy an apartment, then the bank will be able to pick up the apartment itself.
Mortgage loans require the collection of more documents than the classic consumer. The mortgage rate is much lower than the consumer rate.
To obtain a mortgage, guarantors are often needed. The initial contribution to purchase housing on credit is quite large, while a consumer loan can be taken without a down payment.
What is the loan rate
The rate on the loan means the amount that the consumer will overpay for the year of using the loan as a percentage of the original value of the goods or the amount of money given out.
The interest rate includes the bank's costs and, of course, its direct profit. The lower the interest rate - the less you overpay.
What is the interest on the loan
The concept of "interest on a loan" should be distinguished fromthe notion of "loan rate". The interest on the loan means the amount that the borrower will overpay for the entire period of using the loan, and not for the year. Otherwise, these concepts are similar. When concluding a loan agreement, you should pay attention to the interest on the loan and ask the bank specialist to calculate the total amount of the overpayment for the entire term, and not for one year. An important point is the time of using the loan. If you repay the loan ahead of time, the bank will recalculate the interest rate, which means that the overpayment will be less.
What is credit refinancing?
Refinancing is a loan thatthe borrower takes to pay off the previous loan. Usually this is used to lower the loan interest rate. For example, you took a cash loan in one bank, and a couple of months later another bank offered a lower interest rate, which means a smaller overpayment. Then you take a new loan, with a lower rate, this money extinguish the old, and then pay out a new loan. Refinancing is also used to extend the loan period.
Remember, there is nothing terrible or shameful about lending. But to conclude the contract should be carefully studied all the documents. Good luck to you!