What are commodity loans? Lending terms. Interest
People treat loans differently. Some believe that commodity loans help to quickly buy the desired product, while others recognize it as a great way to select all savings from the population.
This article is not intended to convince you of one opinion or another. The main task will be to explain the nature and conditions of consumer lending for the purchase of goods. And the conclusions about what is bad and good, you can already do it yourself.
What are the distinguishing features of such loans?
Commodity loans are a target loan. That is, the client does not receive cash in the hands. The bank itself transfers funds by non-cash transfer to the account of the store where the borrower wants to buy goods.
A similar scheme is used for lending to buy a car or real estate. Commodity loans differ from the above in that the loan amount in them is much smaller.The amount of money that banks are willing to provide the borrower to buy goods in the store is ten times less than when buying a home or car.
The second difference in commodity loans is the crediting period. Basically, consumer lending for goods implies a term of a transaction of up to 2-3 years. In the case of a car or real estate, the duration of the contract can reach 15-20 years, depending on the conditions of a particular bank. Interest, or the fee for the use of a loan, can be either higher or lower than the conditions that are offered for large transactions for a car or a house. This is due only to the policy of the bank itself, which is based on the structure of the loan and deposit portfolio.
If you compare commodity loans with those that are issued in cash in hand, the first differ in cheapness. For cash that can be used for any purpose, people will always pay more, and this is logical. Indeed, in the event of failure to make payments on the loan for the goods, the bank may confiscate it, and this is a kind of safety net. In the second case, the debt repayment process is much more painful and longer.
For example, if you compare the real loan rate for loans in cash from large banks, you can count about 70% per year, including insurance payments. In the credit for the goods, this rate is about 30-40 percent per annum.
What are the credit conditions for the product?
A bank loan for a product can be either with a mandatory down payment or without it. This is good in the case when you have no money at the moment, and you do not have the opportunity to make a “zero” payment. However, interest rates on loans with such an option are often at a higher level.
And if you have money to make a down payment, be sure to make it - this will significantly reduce the level of overpayment and your debt obligations.
The terms of such loans usually range from three to 24 months.
This form of loan can be as with the life insurance of the borrower, and with the insurance of borrowed property. And maybe even without the insurance option - all of the client's choice.
Most often this form of credit is found with a method of payment, which is called an annuity payment. It implies equal payments in favor of the bank throughout the entire crediting period.
It is calculated quite simply:
- An = (Tk + Tk x Pg): P, where:
An - annuity payment;
Tk - the body of the loan (the amount that is worth the product itself);
Pg - the annual interest rate on the loan;
P - the period or number of months for which the loan is issued.
What must be present in the contract of consumer crediting for goods?
When concluding a contract, it is necessary to pay attention to the following points, which are mandatory:
- amount of credit commitment;
- lending terms;
- loan terms;
- interest rates and the level of fees for the use of the loan;
- rights and obligations of the borrower;
- rights and obligations of the creditor;
- contract time;
- conditions for early repayment of loan obligations and termination of the contract;
- the procedure for resolving disputes between the parties;
- signatures and seal of the party that provides the loan;
- borrower's signature.
According to statistics provided by lawyers, 8 out of 10 people never read contracts that they sign. Such negligence to documents is unacceptable, especially when a person takes a loan from a bank.
It is mandatory to study the contract completely and read to the last word. A consultant may not tell you everything or “forget” about something.If you finish reading the document that you are signing, then the chances of being deceived will be much less.
Where can I get a commodity loan?
The interest on such a loan does not depend on the method of its registration. The number of channels through which you can get a bank loan is growing every day.
The first option is to contact the bank branch. The classic way to get a loan for a product is to come directly to any office of a financial institution. Perhaps this is the only way that will allow you to find out all credit conditions in full. Although it all depends on the skills of the representative of the bank who will serve you.
What are the disadvantages of processing a consumer credit for goods in a bank?
Of course, this loss is a big waste of time. Very often, everything happens as follows. A person goes to the bank to take a commodity loan. Before you get to the credit counselor, you need to stand in a queue. For example, if you have 2 people in front of you, then you will need approximately 20 minutes to wait until they are served. Then time is spent on consultation and the introduction of the application into the program, where the loan amount is indicated.It's about ten minutes. If the program rejected the request and made a negative decision, then it was generally wasted time.
Further, after issuing a positive result, the bank will need the details of the goods - the invoice is from the store where you want to purchase products. And there are two ways: either the person goes to the store on his own, takes the invoice and brings it back to the bank, or the financial institution can independently agree with the seller. In both cases, time is spent quite a lot, so to speed up the process, you should first go to the store, take the bill, and only then go to the bank.
The second way is to issue a commodity cash loan directly in the store, at the time of purchase of the goods. You, probably, have repeatedly seen representatives of various banks or financial institutions located in home appliances stores. This move is taken in order to save the client's time, and also with the aim of “taking” him more “warm” when a person’s eyes light up in anticipation of a new purchase. Credit counselor is ready to provide a commodity loan within 5 minutes.The main thing - do not rush and learn from him all the conditions. Often in large stores there are representatives of several banks. If you do not like the loan offer, you can always contact a representative of another financial institution.
What are the drawbacks of processing consumer credit for goods right in the store?
Firstly, usually in such places those representatives of banks work who are quite well able to issue loans and impose unprofitable offers. Away from the bank, they may even invent some non-existent conditions, additional cross-sales. And to figure them out is quite difficult. For example, directly in a financial institution in case of a lack of confidence in a bank employee, you can always contact his boss. And in this place such a credit counselor is "his own master."
But do not worry, there is a way to get out of this situation as a winner. Each bank has a hotline to which you can always call. It often happens that other credit conditions will be announced to you on the phone, and they will not coincide with those that the bank representative who works in the store announced to you.
Note: the correct conditions will be only those that you voiced by the call center operator. Why? Because all telephone conversations in the bank are recorded, and in the event of any disputable situations can be used as evidence. Therefore, the operators can not blatantly lie to you and provide incorrect information. In this regard, having doubted what the credit consultant in the store says to you, ask him to give the hotline number and feel free to call there.
The third way is to get a loan online
Recently, this method is very popular, as it frees from the need to be present in a bank or store, waiting for their turn. Everything is quite simple - go to the Internet and within a couple of minutes make an application.
What are the advantages of such a design?
This way will save you a lot of time. In just a few minutes you can review the offers of various banks and choose the right one.
It is suitable for those who do not want or do not like to communicate with bank employees.
What are the drawbacks of processing a loan for the goods on the Internet?
The main negative point worth noting is incomplete transparency. On the loan page, all the conditions contained in the commodity loan agreement are not written, some nuances of the transaction may also be omitted. This is done in order to attract more customers.
Is insurance of goods or life compulsory when applying for a consumer credit for goods?
In 99% of cases, no insurance is required. It is always imposed and presented in the form of the only possible credit option.
Of course, each bank draws up loans on its own terms, and it is quite difficult to argue with an unskilled person with them. Literally speaking, a representative of a financial institution will simply say to any indignation: “I don’t like something? Then don’t take it.” This is a pretty good way to dictate terms. And people who urgently need to make a purchase, just have to "swallow" unprofitable conditions for lending.
Look at the terms of any insurance contract that you are offered to sign. There you will not find a single hint that it is mandatory.Each such contract will be called "Voluntary Insurance Contract" or begin with these words.
You can also ask a bank employee to show you a so-called financial service passport. Just as you have a citizen passport, in which all your data are indicated, so any banking product has a document containing all its conditions.
Many people are fooled by the trick that if you don’t choose insurance, you’ll be denied a loan.
This statement is unreasonable, since the times when people considered an application for lending have long gone into oblivion. Now everything is much simpler: an application is entered into a special program, and in the automatic mode the computer selects the appropriate solution. And believe me, if you do not have a negative credit history in the database, then you can get a loan without insurance.
Even if you have already surrendered under the pressure of a credit counselor and agreed to insurance, do not think that all is lost. You can call the insurance company at the same time or the next day and notify you that you want to break the insurance contract.In this case, they will have to give you an application form and indicate the address to which it will be sent. True, you will not be able to return 40% of the transaction to yourself, since often this is exactly the percentage that the insurance company takes on its “business”. But at least something to get back in your pocket will succeed.