Standard and long-term loans: everything you need to know about loans

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Everyone has heard about long-term loans at least once in their life. But not everyone knows for sure what they are. In short, this is a loan provided by banks and other financial institutions for long periods (from three years). But the topic contains a lot of details, and I would like to talk about them.

About service

Long-term loans are most often issued to two types of clients. The first group includes individuals who want to buy an apartment or build a house. But the funds are not enough, so they decide on a mortgage. It is known that it is provided for a period of 5 to 30 years. This type of loan can be taken by anyone between the ages of 21 and 65 who meets other requirements, which will be discussed later.

Also, long-term loans are often issued by legal entities. Their purpose is to use the funds to finance fixed capital. It is worth noting thatin the case of legal entities, long-term loans have a broader concept and definition. These include equity capital (management companies and funds of the bank), the issue of bonds, deposits for more than one year. But all of the above has one goal - investing money in an investment production project, which will bring profit in the future.

Mortgage and car loans

This is the kind of loans available to individuals. The most popular long-term loans in our time.

The peculiarity of a mortgage is that the purchased housing becomes a pledge. If a person fails to repay his debt, the bank will take the apartment / house / land to compensate for the losses. On average, mortgages are taken for 10-30 years. In order to be approved, a person must confirm his ability to pay. To do this, he provides a certificate of income, a document on employment and his work experience, and something that certifies his identity. If a person takes a really substantial amount, a “partner” in payments, that is, a co-borrower, may be required. For example, a couple is more likely to get a large loan than a single person.

A car loan is also a long-term bank loan. It is usually taken for short periods, but some repay the debt within ten years. The minimum amount is 150,000 rubles, and the maximum is not limited. Another plus is that in the case of a long-term car loan, you don’t even need to make an initial payment. It is very comfortable. Butinterest on long-term loans is higher - not 12-15%, but 15-20% per annum. If, for example, a person takes 10 million rubles for 10 years, then in the end his overpayment (in the case of 20%) will be 2,000,000 rubles.

Documents

There is a standard set of papers that you will need to provide when applying for long-term loans (and loans). Depending on the requirements of a particular bank, the list of documents may vary. But you will definitely need an application drawn up according to the established model, a borrower's questionnaire, an original and a photocopy of the passport and a certificate of income. Typically, the period for which a statement is needed varies from 3 months to 2 years.

You will also need a photocopy of the work book, certified at work. Men will need to provide a military ID. If you have a driver's license, then you will need it (as a second identity document).

Usually, the application is considered within a week. But if all documents are in order and the client meets the requirements, they can approve earlier.

About investing

If a long-term loan is needed by a legal entity, then it will need to provide its investment project analysis. Bank employees, having familiarized themselves with it, should understand that what they are asked to issue a loan for will really make a profit and pay off the costs. The project must demonstrate its value and effectiveness as much as possible.

The document must contain an engineering assessment of the idea and market demand, cost estimates, work schedule. Also needindicate the profitability and the exact period for which the costs will pay off. It will also require an environmental analysis (the environmental friendliness of the project), as well as proof that the borrower will be able to implement the plan.

The bank must understand that the loan will be well secured, the investment will pay off fairly quickly, the risk is acceptable, and the idea is original. If all conditions are met, then the legal entity will be given a loan.

Short term lending

It's worth briefly talking about loans, the repayments on which are given much faster than in the case of the same mortgage. Long-term and short-term loans are equally in demand. Only the second type of loans is issued by a much larger number of people.

And this is consumer credit. They take it to solve the so-called "domestic" problems. If you don’t have enough money to buy an apartment, or you need to make repairs, buy a technician, etc. Almost all banks provide consumer credit. But it is better to contact the state, as there are the most acceptable conditions. It is issued for a period of up to five years, at interest that is quite acceptable (an average of 12-14% per annum). If you can find a guarantor, you can lower the rate. The maximum amount is 3,000,000 rubles. But the amount of funds the bank is ready to borrow will be decided by financial analysts after a detailed acquaintance with the income statement, length of service, etc. If a person, for example, receives 60 tr. per month, then 1,300,000 rubles for 5 years will be given to him.

Microloan

This is the last thing I would like to say. The most unprofitable lending option, but sometimes only he can help out. To get a microloan, you only need a passport. Age is not important, as long as it is 18. The amounts are small - 15, 20, 35 tr. Sometimes more, depending on the conditions offered by the organization. But the interest is large - from 0.75% to 3% per day. Of course, borrowing a large amount for a month, you can go broke. But as an emergency, a good option. For example, there are still a few days before the salary, there is no one to borrow from, and the refrigerator, which a person has had his eye on for a long time, is suddenly sold with a 50% discount. In this case, there really are savings - several thousand paid as interest to a microfinance organization will not “hit” the wallet much, given how much money the borrower saved at a discount.