A loan is a financial operation in which a person acting as a lender, grants an asset to another person through a contract or agreement. The loan is made in exchange for obtaining an interest, that is, the borrowed money is charged with interest.
Loans are considered a financial operation of single benefit and multiple consideration due to ‘installment payments’. The repayment of the loan will be made according to the duration, interest and established agreements, which allow to return the principal of the loan with interest.
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In the financial world, there are different loans. Are they simple loans which are those that interest is not paid periodically and those loans with american systems that have the periodic payment of interest.
In some cases, the loans are single benefit and consideration, since there is an agreement between the parties where the total return is agreed with an interest at the end.
What are the elements that make up a loan?
To work or receive a loan it is necessary that you know the elements that make up said transaction.
Main capital: refers to the amount of money that has been borrowed and on which interest will be paid depending on the loan duration and risk of the loan purchaser.
Interest: it means that it is the financial cost of the loan. Interest is the charge charged for the use of other people’s money or capital for a time, and is represented as a percentage of the principal.
Share: are each of the repayment payments where the principal and interest are distributed.
Term: refers to the set time during which the use the loan. The term will run from the beginning of the contract until the last installment is paid, thus returning the entire principal and interest.
Lender: the person who lends the money and to whom interest is paid.
Borrower: It is the person who receives the loan and must return it in accordance with the agreement.
This type of loan, in addition to the personal payment guarantee, also includes a so-called ‘real guarantee’ which consists of the mortgage of a real estate.
This means that in case of default of payments, the bank can keep the house subject to mortgage and become the new owner.
In this type of loan the type of interest is usually lower that in the rest of the loans and almost always the amount that is loaned never exceeds 80% of the value of the house used as collateral.
Is a financial instrument intermediate between the long-term financial liability and the capital stock to which any company can draw. In this case, the rate and interest is normally variable taking into account the evolution of the company.
The participative loan is considered book equity for the purposes of capital reduction and company liquidation. The accrued interest of this type of loans are deductible for the purpose of the corporate income tax base.
- Inter-business loan
They are loans where a professional or entrepreneur lends or grants another a certain amount of money in the normal course of his business activity. They are usually less expensive and do not require bank intermediation.
- Loan through crowdlending
Is about loans between individuals, between which both companies and individuals receive an amount of money from a group of investors. These lend a certain amount in exchange for profitability. This entire process is managed through crowdlending platforms.
Guarantees for the lender
For there to be an assurance that the lender will receive the borrowed amount, there is the possibility of requesting a guarantee or guarantee to the borrower.
Said guarantees may be the following:
- Personal Guaranteed Loans: those that are awarded taking into account the personal creditworthiness of the borrower or of a third person with the role of guarantor.
- Loan with pledge guarantee: with which the payment of the credit with a personal property given in pledge. That is, the lender asks the borrower for an asset that will be returned at the time of repayment of the loan.
Credit and loan is it the same?
Although the credit and loan are similar, their differences are well marked. With regard to credit, the bank provides an account to the customer where he will access the amount he needs.
The client usually pays the requested credit from periodically with the expenses and interests added by the entity.
A loan is one in which the bank puts disposition of the debtor a fixed amount of money but this must be returned together with the interest in a given time.
It is usually an operation to short or long term that is amortized in regular installments as the client pays it.