Monday, 21 July 2014

security for loans

The need to provide security for the risk associated with it undertakes financial institution giving us a loan. In the case of individual customers is now applied properly only five basic forms of loan collateral. What is security?

The financial institution giving us a financial liability bears a certain degree of risk associated with the transfer of funding, whether it is a loan, or a loan. It is in order to assess this risk is estimated our creditworthiness, in which case the lender calculates how much can we borrow, so that was it for him relatively safe. By downloading the credit or loan assume full responsibility for the payment of the debt, but this responsibility does not have to be sufficient for the lender. Therefore, before granting liability can manage a particular form of loan collateral. Until now the most widely used forms of collateral loans include:

1st Mortgage: a mortgage of course will be a form of collateral for the loans and mortgage loans. The condition of the award is the need to alert the creditor (lender) to the real estate mortgage book. It makes financial institution becomes so called mortgagee. In the case of non-repayment of the loan mortgagee may seek satisfaction of their rights under the property, which eventually take over the property to repay the debt. However, if the obligation is repaid regularly scheduled loan mortgage is finally expires with its complete repayment.

2 Transfer of title and lien: is the most common form of security currently the case for the so-called car loans, or special-purpose loans that are granted for the purchase of the car. By appropriating purchased the car does not, however, becomes our property, and formally belongs to the lender. It is only transmitted to us in life - available until the repayment of the last installment of the loan. This form is also characteristic for pledges, but in their case the car will be entered in the register of pledges, and the repayment of the loan withdrawn from him.

3 Promissory note: the vast majority of blank promissory note is used as collateral for the mortgage. It is therefore time-limited to the term of the loan, such as two years from the date of grant funding. A characteristic feature of the blank promissory note is that it only bears the date of its issue. In the case of non-payment of subsequent installments will be completed in accordance with the so-called. promissory note agreement, a document that is attached to the loan agreement. Declaration The bill sets out the conditions and manner of supplement amount and date of payment bill.

4 Insurance: Insurance is now very common methods of securing virtually all types of loans. Financial institutions require borrowers obligation to temporary or permanent protection from the occurrence of a given factor. This can be both job loss and the temporary inability to perform her. The lender may also require insurance subject of the target lending - an apartment, a car - or insurance in case of death of the borrower. For the part of insurance is also used for the assignment of any claims arising from the insurance policy - for example, if we are insured stolen car, which we took for a loan, the insurance policy will make it the lender will be paid the amount of insurance. It also repay our debt, so we will not be obliged to continue to regulate the loan installments, which received the purchase of a car.

5 Guarantee: Form security for the loan guarantee is currently being applied in the case of individual customers less and less. The aim of the guarantee is that the repayment of our debt is guaranteed by another person (sometimes institutions), which becomes a guarantor. Guarantor confirms that it is ready to repay the loan is incurred if the lender discontinue its repayment. Responsibilities guarantor shall be described in the credit agreement, as it may have a different character. A guarantor may respond is not only for borrowed capital, but also accrue interest, and even other additional costs, such as administrative penalties or costs of a possible recovery.

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