Understanding Bank Loans: Types and Procedures

Posted on Jan 20, 2025 in Business Administration and Management (BAM)

Administrative Procedures: Steps to Get Funding

Having the need to secure financing (an investment, afford to spend on a specific date, or cannot meet payments) – Apply for funding (the bank gets personal and financial information and client on the operation you want to do. And the customer is informed of the operation + convenient for him). The bank examines the customer using:

• CIRBE (reported debts of the client in other banks)
• RAI (reports of default effects)
• Registration of Property (property you have and their loads)
• Register (financial information of the company at any given time)

Evaluation of the customer (does the department of risk and decides to guarantees that the client must have if default) – Formalization (we perform the current operation by contract or policy notarized) – Cancellation (end the current operation with the regular loan repayment or a payment)

Loan Agreement

A Loan Agreement is an agreement by which a lender (legal person) given to a borrower (natural or legal person), money to use it and return it with some interest in l

Features:

time you set in the contract.

• The bank enters all the money at once on the account. The borrower and where he used to cover the need to ask him.
• The borrower repays the loan in the amounts and terms agreed upon (a part of the capital + interest)
• The bank grants the loan to obtain a benefit (charge interest at fixed or variable % outstanding principal.)
• The loan may be issued in currencies other than the Euro and will be returned in the same.

Classification

Loans are classified by the following criteria:

• Maturity within: Loans a/c or a/p.
• Warranty: Personal or real.
• Interest rate: Fixed or variable.
• Its implementation: Policy or deed.
• Form of redemption: One payment or income.

Personal Loans

In case of default, the guarantor responds to all present and future assets.

The bank makes an intense study of the customer (type of contract, payroll, income tax declaration, and the property of the client and guarantors)

Personal loans are formalized in a contract drafted by the bank (loan policy), a notary testifies to the operation and specifies the personal information of the lender and the borrower, the interest rate, and fees to pay.

Expenses Paid by the Borrower:

• Fee and study
• Brokerage notary or broker.
• Interests + higher than the mortgage loan
• Life insurance
• Early termination fee.

Collateralized Loans

In case of default by the borrower responds to real estate (mortgage) or securities (collateral)

The mortgage loan is granted by a bank guarantee mortgage on a property (which is being financed).

Features:

• Guarantee mortgage on the property, i.e. the bank repossess the goods that sell at public auction for non-payment of dues.
• Is formalized through a public document, drafted by a notary, signed by the notary, the lender, and the borrower.

Expenses:

• The same as the personal loan +:
  • Public deed of loan and property registration in the Registry.
  • Transfer tax and stamp duty.
  • Home appraisal (if required)
  • Household comprehensive insurance

Differences: