What Does bank credit Mean
In order to know the meaning of the term bank credit, it is necessary, first of all, to discover the etymological origin of the two words that give it its shape:
-Credit comes from Latin, exactly from the verb “credere”. This, in turn, derives from a Latin expression "certum dare" and comes to mean "give what is certain."
-Bank, on the other hand, is the result of the sum of two clearly delimited components: the Germanic "bank", which is synonymous with "financial institution", and the suffix "-ario", which is used to indicate "membership" or "relationship".
Credit is called the money that an individual or an institution lends to someone, setting certain conditions for its return (interest, terms, etc.). Banking , for its part, is that linked to a bank : an entity that provides financial services.
A bank loan , therefore, is one offered by a bank to its customers. In this case, the bank becomes a creditor by delivering a certain amount to the customer, who becomes a debtor . The repayment of the loan must be made according to the agreed requirements; otherwise, different types of penalties may apply.
Suppose a man goes to a bank to apply for a loan. The entity grants you a bank loan of 10,000 pesos with an interest of 15% , which must be returned within a period of twelve months. It also charges you 5% for administrative expenses and forces you to take out insurance equivalent to 1% of the credit. This means that, once you have returned this bank loan, the person will have disbursed 12,100 pesos . In other words: the bank loan will cost you 2,100 pesos (the difference between what you received and what you returned).
In order to get a bank to grant a loan, it will be necessary for the applicant, among other things, to be able to prove their solvency. Likewise, you can choose to proceed to present a guarantee, which will be the security that the entity will have to know that it will be able to recover the money it lends in the event that it does not pay the fees that have been established.
In the event that the person who has applied for a bank loan does not pay their installments, the following will happen:
-If they have not paid a installment within the established period, what will happen is that they will also charge them what is default interest.
-If there are two installments that have not been paid, the bank will establish that person or company on its list of defaulters.
-In the event that there are three or more loan installments that have not been paid, the bank will proceed to initiate a claim through the courts to recover the money that has not been paid.
There are different types of bank loans. Personal loans are those that are given to people, who can request them for different purposes (take a trip, remodel the house or organize a wedding, for example). Trade credits , on the other hand, are granted to companies . The mortgage loans , moreover, are aimed at the acquisition of land or a house being used as collateral purchased own good.