Money is an exchange tool that we use in a daily transaction. No wonder if in every aspect of life, we will always need money that has been crowned as a legal instrument of exchange and payment. Money is already used in all countries even though each currency has different values.
Money is also one of the determinants of a person’s life because sometimes a person’s success or failure is often associated with the amount of money he has. In the financial system, there are various things related to the circulation of money. The bank itself as a legitimate financial manager often publishes various programs that can be enjoyed by the community.
One program that is often given by banks to the public is loans or also often referred to as credit. Many people who have used credit services from banks as a solution to their financial problems.
Credit itself comes from Latin, ‘credere’ which means trust. This is in accordance with the practical value adopted in the credit system, where the lender (the bank or other financial institution) provides trust to the borrower of funds or also called the debtor. In other words, the definition of loans is a type of debt issued by financial institutions with a certain nominal amount and has certain agreements related to loan repayments.
Understanding of Loans and Credit Instruments
There are several things related to loans, such as filing conditions, collateral, amount of funds, repayment period (tempo), and the cost of fines. All instruments are regulated by creditors, namely banks or fund providers. To reinforce the notion of a loan, the following is an explanation of each of the points usually in a loan agreement.
For someone who wants to get a loan or credit, they must choose a financial institution that provides these services. In addition to banks, savings and loan cooperatives and pawnshops are one of the institutions that usually provide credit. You must successfully meet the criteria or conditions provided by the credit provider institution. The terms of this submission usually vary, depending on the needs of the lender. Some general things that must be prepared to apply for loans include, a valid KTP, Family Card, savings book or current account for the last 3 months, and other guarantee documents.
Some credit provider institutions will generally ask about collateral or collateral included in the application for a loan. The aim is to protect if there is bad credit in installments.
This guarantee will be the property of the credit provider if the driver cannot repay the loan in a certain period of time. This loan guarantee can be in the form of vehicle ownership, property or jewelry documents. Guarantees will generally be asked when you apply for a large amount of credit.
But now you don’t need to worry about loan guarantees because some online loan providers don’t ask for guarantees when you apply for credit. The term collateral-free loans is now popular since many lending institutions release debtors from collateral requirements.
Amount of funds
The amount of funds to be provided by financial institutions is usually adjusted to financial strength or guarantees included. Please note that the more complete the requirements that you can submit, the faster the amount of funds you want is liquid. Usually, the fund provider provides a ceiling with a certain nominal value and is accompanied by an appropriate repayment period.
This is one of the important things you should know before applying for a loan. Please note that the bank will take advantage of the funds they issue. In each installment, there will be an additional interest expense with a certain amount. You should be able to find a place for a loan provider that provides low interest and installments so as not to burden you.
Return Period (Tempo)
Other instruments related to the definition of loans are the period of return or maturity. You must be able to estimate the repayment period to suit your financial strength. Please note that the longer the refund period, the greater the interest that accompanies it. But the faster the time period, the greater the amount of installments to be paid. So, make sure you choose a payback period that is in accordance with your financial capacity so that it will not be burdensome in the future.
In addition to several important things above, the cost of fines will also be included in the loan agreement clause. Fees for fines will be given when the debtor is unable to pay installments in accordance with a predetermined maturity. The amount of the fine is generally stated in the loan agreement contract. Make sure you pay installments at the right time and do not cross the line so that you are not subject to fines.
This is information about the meaning of loans and various other institutions in the loan application clause.