Bank loans: types and conditions

At present, bank loans have become a common source of funds for large acquisitions for both the population and enterprises. It is often not easy for an uninitiated person to understand the variety of loan offers and lending terms.

A bank loan is the transfer by a credit institution of a monetary or a legal person of monetary funds on a paid basis with the condition of their return within a certain period.

Types of bank loans

In the economy there is no single division of loans into certain types of loans. The following are the most common signs of classification:

• The crediting entity (individuals, legal entities);
• Term (short-term, medium-term, long-term, on-demand);
• Purpose (consumer, car loans, investment, mortgage, trade, industrial, agricultural);
• Availability of collateral (secured, unsecured);
• Size (small, medium, large);
• Method of repayment (redeemed by a single amount, redeemable on schedule);
• Type of interest rates (with a fixed interest rate, with a floating interest rate).

Currently, the bank loan, the banking system of Russia are undergoing changes: the number of loan offers is growing, their conditions are becoming ever more diverse.

Later in the article, we will examine in detail the most frequently encountered bank money loans for individuals and significant parameters of lending programs.

Consumer loans

Consumer - this is bank loans for urgent needs, the funds for which you can spend on any purpose at your discretion. Consumer loans can be the best option if the amount is not large, and the speed and ease of obtaining money is very important. If desired, you can get a loan to a bank card, account or cash. Payment is possible through cash registers, ATMs and via the Internet. You can pay by credit card, cash or transfer from an account.

Conditions:

• The size of the loan: the minimum amount varies between 15-50 thousand rubles, the maximum - from 500 thousand rubles to 3 million. For customers with a faultless credit history and salary customers, the amount can be increased.
• Interest rate: depends on several parameters and has a wide spread in different banks.
• Term of the loan: as a rule, issued for up to 5 years, but may be increased for certain categories of borrowers or with an expensive mortgage. For example, Sberbank issues a consumer bank loan for up to 20 years with a real estate mortgage.
• Security: bail, guarantee of individuals or legal entities, issue without security are possible.
• Term of examination: from 30 minutes to several days.

Benefits:

• A small package of documents.
• Simplified procedure for considering a loan application.
• The short term of the decision on extradition.
• Control over the purpose of spending money is missing.
• Possibility of receiving money on hand.

Disadvantages:

• High interest rates on the loan.
• Low credit limit.
• A short period of the loan, and as a consequence, a large monthly payment.
• The borrower's maximum age is lower than for other loans.

Credit cards

Conditions:

• The size of the loan: the maximum amounts on credit cards are usually low and amount to 100-700 thousand rubles.
• Interest rate: the highest rates among all loans, range from 17.9% to 79% per annum.
• Term of loan: up to 3 years
• Security: not required.
• Term of examination: from a few minutes to 1 day.
• Grace period: 50-56 days, during which no interest is accrued on repayment on time.
• Additional commissions: often there are fees for cashing and for accompanying the card. For example, the "Home Credit" bank card "The card with the benefit" costs 990 rubles per year, and the "Useful purchases" card is free of charge.

Benefits:

• Presence of the grace period.
• A simple procedure for agreeing the application.
• The minimum time for consideration.
• The minimum set of documents.
• There is no control over the expenditure of money.
• Possibility of reception by the courier or by mail.

Disadvantages:

• High interest rates.
• High fines for delay.
• Commission for withdrawal of funds in an ATM.
• Low loan amount.
• Annual fee for servicing the card.

Car loans

Cars became an urgent need, but not always enough money for such a purchase. Bank loans for the purchase of vehicles are called auto loans.

Conditions:

• The size of the loan: the maximum amount is 1-5 million rubles.
• Interest rate: from 10% per annum to new and from 20% per annum for used cars.
• Term of the loan: up to 5 years, for large amounts the term can be increased.
• Security: the vehicle purchased.
• Term of examination: from 30 minutes to several days.
• Initial payment: more often 10-25%, but some banks offer and programs without a down payment.

Benefits:

• Low interest rates on the loan.
• The amount is more than the consumer loan.
• Short terms of consideration of the application.

Disadvantages:

• The package of documents is more than with consumer lending.
• A short loan term and, as a consequence, a large monthly payment.
• The need for initial savings.
• Control over the expenditure of funds received.

Mortgage loans

The real estate market is actively developing, people are striving to buy apartments and build houses. The bulk of housing acquisitions occur with the participation of banks. Just for this purpose a mortgage loan is designed - a loan for the purchase of real estate.

Conditions:

• The size of the loan: the amount of the mortgage varies from 100-300 thousand to 500 thousand-15 million rubles.
• Interest rate: depending on the loan program from 10.5% to 25% per annum. Among all types of loans, rates for mortgage programs are the lowest.
• Term of the loan: in different banks varies from 15 to 30 years.
• Security: pledge of purchased or existing housing.
• Down payment: from 10-25% of the cost of housing.
• Term of consideration: from a week to a month.

Benefits:

• Ability to issue large sums.
• Long term loans.
• Low interest rates
• The possibility of attracting co-borrowers.

Disadvantages:

• A large package of documents.
• Long term of consideration of the application.
• The need to transfer to pledge of real estate.
• Control over the targeted use of funds.

Loan parameters

Before you decide on a certain type of loan and lending program, you need to evaluate how profitable it is and analyze its main parameters:

• Interest rate.
• Method of repayment.
• Type of repayment schedule.
• Base for interest calculation.
• Additional commissions.
• Related costs.

Interest rate

The spread of interest rates is quite noticeable for various lending programs even in one bank. The percentage of bank loans depends on many factors, the most significant of which are as follows:

• Trustworthiness of the client. Credit institutions prefer customers who receive a pension or salary from them, as well as borrowers with a positive credit history. For such categories, applicants are always offered preferential interest rates.
• Term and amount. It is profitable for the bank to issue large sums, so with an increase in the amount, the rate decreases. And vice versa - the longer the period, the higher the rate. For longer periods, rates are sometimes higher to five percentage points.
• Speed of registration. Express loans with a minimum list of documents carry a big risk for the bank, so such loans are sometimes more expensive in 2 times.
• Goal. For targeted loans (for example, mortgage or auto loans), the rate is always lower. Even in the context of consumer loans, there are targeted programs with preferential interest (for example, on the development of a personal subsidiary farm).
• Availability of insurance. The existence of life insurance or loss of work can help reduce the rate by a few points.

Types of repayment schedules

When drawing up repayment schedules, two methods of partitioning are used: annuity and differentiated.

If the schedule is broken by identical amounts for the whole period, then it is annuity. This type of chart is now most often used by banks. The monthly payment in this schedule consists of an increasing amount of principal and interest, and therefore is not as burdensome for a borrower as a differentiated one.

In a differentiated schedule, the amount of the principal debt is divided by equal amounts for the whole period, and the amount of interest decreases with time. At the very beginning of the contract, payments for this type of breakdown are higher, but in terms of general overpayment it is more profitable. The amount of interest in the differentiated schedule for the entire period is lower than in the annuity, where the amount of the principal debt is repaid first in small amounts, and the payment is basically made up of interest.

Base for interest

According to the Regulation of the Central Bank of Russia, interest on bank loans is accrued on the balance of debt, but some credit institutions indicate in the loan agreements as the basis for paying interest the original amount of the issue.

The first way, naturally, is more profitable for the borrower, since the amount of interest will decrease with each repayment of the principal debt.

In the second variant, interest will not change during the whole maturity period, as they are calculated based on the original loan size.

Additional fees

In the process of paying for a loan, it may be found that there are additional commissions, whose presence is better specified before the signing of the loan agreement.

Banks provide for various commissions related either as a pledge or an application for a loan, or with its servicing and repayment.

Related costs

Related costs can arise at different stages of obtaining and repaying a loan. During the review and registration of a loan, such expenses are most often associated with security. For example, the mortgage of real estate is state registration, for which you must pay state duty. When pledging vehicles in the organs of the State Traffic Safety Inspectorate, seizure of registration actions is also imposed with payment of the state duty. Some banks have commissions for urgent consideration of the loan application or for assessing the collateral. Of course, such expenses are paid by the borrower.

One of the most costly articles of related costs can be considered insurance: personal, property, CASCO, from job loss and more. Insurance, as a rule, must be renewed every year.

Despite the fact that the Russian economy is going through a difficult period, banks and bank credit remain in demand among the population of the country. Credit organizations offer a variety of lending programs, and, having understood the conditions, you can profitably use them.