Numerous are the reasons that lead customers to turn to credit to meet an existing need. We can talk about buying a car, a house, a trip or another. As we know, some of these purposes have a financial justification, and many others are pure consumption.
It is necessary to assess the importance of the good or service to be acquired before resorting to credit in order to determine whether such good is necessary or whether it will be a passing manifestation. For example, you may hesitate to buy or lease a home, a very important decision that needs to be considered.
Features of All Loans
- Cost or interest rate;
- Purpose (personal credit, automobile, housing).
It is these four variables that will determine the value of the benefit payable for the good or service that it intends to acquire and of course, there is the direct relationship between both and the combination of them result in different results for the benefit to be paid. If you want to see all your credits and features visit the website of the Bank of Portugal.
According to the purpose of the loan and with the guarantees offered the amount of capital to be financed has a maximum previously stipulated by the bank, and may differ from bank to bank.
However, it is the guarantee offered that has the greatest impact on the amount, setting maximum values very similar in most banks. Therefore, the personal loan with personal guarantee, for example the guarantee, and the purpose of consumption, is common, the value does not exceed 40,000 euros. Likewise, a personal loan for the purpose of purchasing household appliances will not exceed on average 10,000 euros.
In order to counteract these values, loans with collateralized collateral, such as mortgages or pledges, arise, and in these cases, the amounts to be financed may reach 100% of the value of the guarantee, with values 80% of the value of the guarantee.
Regarding the term of credit, this varies according to the preferences of the client, however, there is a maximum term considered acceptable for most purposes.
As an example, the average terms for car financing, between 60 and 72 months. Regarding the purchase of housing, the deadlines can go up to 50 years according to the age of the client who usually at the end of the credit the client can not be more than 80 years.
It is clear that the term variable is flexible and can adjust to the amount that the client intends to deliver to fulfill its responsibilities. Therefore, it is common to have loans with terms of years and months or years and days.
As you would expect and it was good if there were another way to compensate the banks for the money they lent, the interest arises like the profit or potential profit that banks get for lending the amount to the loan.
The interest rate can be fixed or variable, the first assigning security to the customer and the second reflecting the evolution of the market. Interest rates are presented to the customer as nominal rates, however, in terms of credit, interest rates that reflect the true cost of the same, the APR (Annual General Effective Rate) and in housing credit the APR (Annual Effective Rate).
Credit is thus defined by 3 simple variables that originate all the others involved in a financing process, namely benefits, regularity of benefits, types of benefits, capital shortage, residual value and so on.
We talked about the 3 great features of credits. These characteristics interact with each other to provide benefit at the end of the month, based on any simulator (see for example the personal credit simulator and the consolidated credit simulator).
We suggest that you make a careful analysis and see if you can maintain your performance even in extreme situations (loss of income, for example). In case you can not fulfill your benefits you must act quickly. Mark your financial diagnosis now and see how it reduces the installments of your credits.