- Opening
commission
- Study commission
- Availability commission (for sums not otherwise available)
- Excess commission (for excess funds beyond the agreed limit)
- Debt interests
- Excess interests
Loan: this consists
in the Bank firstly handing over a sum of money to the user, which the user
will have to pay back together with all accruing interest in the time stipulated.
In a loan the user receives the entire agreed amount from the very beginning,
obliging him to return this and all interests on certain dates established
beforehand. Logically, the client must also pay costs generated by the operation
Loans are generally
formulated in a policy regulated by the Commercial Broker, although when there
is a mortgage guarantee they are instrumented by public document authorised
by Notary. They can also be documented by financing effects
Depending on
the type of interest applicable, we can see differences in the following :
Fixed interest
loans
- In these
the interest rate does not vary and stays the same during the
life of the operation, in such a way that the amount to
be paid does not vary during the whole of the loan
Variable
interest loan
- In these
the interest rate varies, either rising or dropping, in function
of some index reference to which a differential or margin
is added
- The
index reference most common is the MIBOR (Madrid Interbank
Offered Rate), announced by the Bank Of Spain
- Revision of the rate works in the following way: the loan contract
sets out the index reference (for example MIBOR), differential
(for example+ 0.75) and the revision date (for example
1 June).
- Each year, on the stipulated date (1 June), the Bank will apply the
interest rate resulting from adding the index reference
(MIBOR =4) to the agreed differential (0.75).
The resulting 4.75 will be the interest rate applied until
the following revision.
- As its name suggests, in this class of loans the interest rate varies
in each period of revision, a variation that can be rise
or fall. For this reason it is important
to take this possibility into account when we decide on
one type of loan or another
There are diverse
forms of payment of loans, although in this country the most common form is
known as the French System, in which instalments are constant, increasing
the payment of capital and decreasing the payment of interest in proportion.
That is to say the same amount is paid during the period calculated but not
for the same concept. At the start, most of what is paid corresponds to interests,
leaving a small part corresponding to reduction of payment of the capital.
Progressively the part corresponding to repayment of the capital increases,
reducing the amount payable for interests, but keeping the same instalment
amount payable during the whole period. The formula for this calculation is
:
Where: R is
the instalment constant; C is the capital borrowed, Ik is the interest rate
for the expressed period to the power of one; k is the number of annual periods;
and t is the time expressed in the number of periods
The most usual
costs in loan operations are :
- Opening
commission
- Study commission
- Valuation of goods (in case of mortgage guarantee)
- Bonuses for repayment insurance
- Intervention and Formalisation Costs (Commercial broker or Notary)
- Management and administrative costs (Accounts Manager)
- Tax
- Registration costs
- Interests
- Commission for modification in the interest rate index
- Commission for advance repayment
- Commission for advance cancellation
- Commission for substitution
- Mortgage cancellation costs
Current Account
Overdraft: this occurs when the user produces a bank balance in favour of
the banking entity, due to having spent more than the available funds. This
is in street terms known as "being in the red". There are two types
of overdraft: the first occurs accidentally, using more funds in a particular
moment than were available, causing the bank to spend when there were no funds
in the account. In this case the user is bound to immediate repayment of the
overdraft. In second place, there are overdrafts that derive from a previously
expressed agreement between the user and the Bank, covering determined amounts
and time. In both cases the overdraft usually generates costs consisting of
:
- Overdraft
interests
- Overdraft commission
- Commission for reclamation of positions of debt
We must point
out that the use of overdraft in an account as a means of financing turns
out to be excessively expensive when compared with the other options, since
the credit entities indicate conditions which are clearly excessive with the
aim to avoid such situation from occurring, and that it is wrong to believe
that the costs are minimal, when the amount in question and time overdrawn
are small. In reality, the cost is far greater than the rest of financing
formulas
Credit and Debit
Cards: Finance cards are not, strictly speaking, active operations but more
means of payment, that is to say, ways in which a person may obtain cash or
spend certain amounts
Depending on
the issuing entity, we can distinguish between :
- Bank
cards: issued by a credit entity, which permits diverse uses.
- Finance cards: issued by a non-banking entity, which has agreements
with commercial establishments for its use as means
of payment.
- Commercial cards: issued by a commercial entity. Its holder may
purchase goods or services sold in the issuers establishments
Depending on
the form of payment for goods and services, we can distinguish between :
