1. Do you have to ask for a loan?
You have to ask for a loan or close a credit operation?
In this case, you must make sure that the process of financing chosen is the one that best suits your needs.
To do this, you must know all the information available and Familiarize yourself with the technical language used.
We have prepared a selection of most used financial vocabulary to help you to understand it better.
2. Ten words you should know when requesting a loan
Without further ado, we are going to explain the meaning of the ten most important and used words, to request financing.
2.1. ASNEF
This acronym describes the National Association of Credit Financial Establishments.
It is an organization made up of banks, finance companies and other important entities in the sector.
Its purpose is to prepare the so-called ASNEF list, which includes delinquent clients.
2.2. Endorsement
The guarantor can be a physical or legal person or a real estate and guarantees the payment of that loan awarded.
If the holder does not settle his debt, the responsibility passes to the guarantor.
2.3. Credit
Although most people often use this word as a synonym for loan, they are not two equal terms. In both cases you get financing, but within the financial vocabulary they present notable differences.
At loan, you receive the entire agreed amount in one go, at the first moment.
In the credit, you have a maximum amount that you can use according to your needs, at your pace. You pay mainly for what you have.
2.4. Compound interest
It refers to the sum of the interest on an investment throughout its duration and takes into account the interest generated from its inception.
Take a good look at this difference, it is the key issue:
- Simple interest: It is calculated on the principal amount borrowed.
- Compound interest: It is calculated on the principal amount borrowed plus the interest accumulated in the previous periods.
2.5. Settlement or amortization of debts
It happens when you want advance the payment of outstanding debts to do it at a lower price -with the aim of saving outstanding interest-.
Its conditions may or may not be contemplated in the signed contract.
In any case, it requires agreeing the liquidation with the lender.
It is applicable to all the remaining debt or to some part of it.
2.6. Home Equity Loan
If you choose or are granted this formula, you provide your own asset as collateral to ensure payment of your debt.
Generally, your own home is used, which you will lose if, for any reason, you are unable to repay the loan.
2.7. Borrower
Also, known as a debtor, he is obliged to pay the loan in a timely manner.
2.8. APR
La Annual Equivalent Rate measure what you pay for your loan.
To the loan installments and interest, add the percentage corresponding to expenses and commissions (opening commissions, study commissions, etc.).
It is, therefore, an extension or correction of the TIN, which we are talking about now.
2.9. TIN
El Nominal Interest Rate It is the percentage of interest that is applied to your loan.
Thus, if you have been granted 1.000 euros at a TIN of 3% per year, the first year you will pay 30 euros to your lender, in interest.
2.10. APR
These acronyms correspond to the Annual Percentage Rate, that is, the total payment that you will have to disburse in a year.
It is the sum of your twelve month installments plus all interest paid.
3. Did you already know these concepts?
As you see, get a loan It can be somewhat complicated, so mastering this financial vocabulary and increasing your knowledge will be of great help.
In any case, you should always look for a transparent financing and easily understandable.
Unfortunately, not all entities are clear with their clients. We recommend that you have only those financial professionals who provide you with the information of clear and detailed way.
Before ask for a loan, we recommend that you search the alternative financing a tailor-made solution. In workcapital, We have extensive experience in the sector and we always put ourselves in your place.
We speak clearly and focus on your interests!
