Credit expansion is a type of monetary credit policy, whose essence is to increase profitability by expanding spheres of influence and revitalizing banking activities. The word itself means "to expand or spread". These values are decisive for the whole process, whose main goal is the struggle for a profitable market for services, investment and raw materials. Most often, we are talking about the result of the policy of the state, which is trying in this way to act on its economy for profit.
Credit expansion is a policy that can be implemented through real accumulation. In this case, it is directed to the provision of loans, the service becomes quite widespread, and in parallel, the range of products offered on the market is expanding.
Antipodomesuch a process is the issuance of debt instruments. This type is called fiduciary. In this case, the issued security turns out to be unsecured. In other words, lending is curtailed, and expansion is directly carried out at the expense of attracted loans.
When is credit expansion useful? This is a policy of expensive money, it limits the issue and holds back the volume of lending. It is aimed at stimulating the issuance of funds and profit growth through an increase in the activity of the banking sector.
Methods of implementation
The main goal of credit expansion is the struggle for markets that bring maximum benefit, areas for capital investment and sources of raw materials. The following methods of its implementation are distinguished:
- External expansion is carried out with the help of investments of private and state capital abroad, the provision of export credits, export premiums, currency and commodity dumping, as well as insurance of the export operation of institutional private units against currency, credit, interest rate, and portfolio risk.
- The internal method of pursuing the policy of credit expansion is aimed, in turn, at regulating the economy, accelerating the rate of economic growth. It includes the reduction of official rates with the expansion of limits on pawnshop and accounting transactions. In addition, it is possible to change the norms of reserves of credit institutions or purchase securities on open markets, and at the same time, an increase in purchases from commercial financial institutions of foreigncurrencies and lower interest rates on them. This process involves lifting the quantitative cap on credit to stimulate economic activity.
Thus, credit expansion is an intensive way to expand credit transactions for profit.
How to get a low interest loan?
Loan interest depends on many conditions. Mostly on the requested amount and terms of return, as well as on the collateral or guarantors. In the case of the latter, the rate will decrease, and from the first two points it directly increases. Are there recommendations on how the client can get the lowest interest rates on loans? Of course, and they are well known:
- You should choose only large state-owned banking structures with transparent tariff systems.
- We need to prepare documents from work in advance.
- You cannot apply for an express loan in stores, their speed of issuance is directly related to the highest interest rates.
- You cannot agree to compulsory personal insurance.
Following these simple tips, the client will always be able to find the best offer for himself. The main thing here is, perhaps, preliminary preparation. Of course, a person will most likely have to spend their time collecting documentation, but it will certainly pay off in full.
Where is the best place to get a loan? It is worth recommending currently popular programs from such banks as Vostochny, Raiffeisenbank, Svyaz-Bank and Rosselkhozbank. Let's take a closer look at them.
Orient Express Bank
It is suitable for those who wish to receive a large amount of money secured by their real estate, which is owned. The maximum figure can be up to thirty million, the percentage usually starts from 9.99%. The contract is drawn up for a period of up to twenty years. They require proof of income, no fees charged.
In this financial institution, the rate is from 9.99% (without personal insurance), the best offer is a product called "Personal". Its main conditions are: the amount of ninety thousand to two million rubles for twelve to sixty months. No commission and security, only confirmation of profit is required, and the application is considered for two days.
He is famous for the Cash program. Interest here varies from ten to seventeen per year, approves amounts from thirty thousand to three million rubles for a period of up to sixty months. There is no commission, no pledge with guarantors is required, they only ask for a certificate of income.
Rosselkhozbank - lending conditions
In this institution, rates start from ten percent for a certain category of citizens classified as reliable customers, and, in addition, for state employees. Such borrowers can count on one million rubles with a maximum loan term of not more than five years, subject to the availability of a guarantee. You can't receive without collateralover seven hundred and fifty thousand. The maximum percentage is 15.5%.
You can get a loan called “Consumer” in it at a rate of ten to seventeen percent per year. A loan amount from fifty thousand to two million is provided to customers without commissions and collateral. The application is considered up to three days. You need to prove your ability to pay. Without insurance, there is a surcharge on the rate of four to seven percent.
After a person decides on the required amount, it is necessary to study what banking organizations are available in the city. It is also important to find out what conditions they offer. The lower the interest rate in a financial institution, the better and more profitable for the client, of course.