What type of loan should I choose?
Lending in Russia, and not only, can be divided into two areas: retail and lending to legal entities.
Retail lending is represented by the following products:
Customer credit. This type of loan is characterized by the issuance of funds to individuals, employees, for consumer purposes (purchase of household and other equipment, the issuance of cash, credit cards, etc.).
- Car loans for individuals. This type of loan implies the issuance of funds to individuals for the purchase of vehicles. Basically, in banks there is a restriction - the inability to purchase special equipment in this way.
- Mortgage. Acquisition of residential or non-residential real estate on credit. Characterized by significantly lower rates compared with other products, as well as long terms of credit (about 10-25 years).
Types of loans in the Russian Federation for legal entities
- Crediting for the purchase of real estate. This type of loan enables legal entities to buy non-residential and residential real estate. The difference from a mortgage for individuals consists in significantly shorter loan terms (5-10 years).
- Loan for the purchase of vehicles. Legal entities, as well as entrepreneurs have the opportunity to purchase both cars and trucks, special vehicles.
- The loan for the purchase of equipment is the most popular among organizations. Technologies do not stand still, so the emergence of new solutions in the field of production makes it possible to work more efficiently and efficiently. The acquisition of such equipment for cash is not available to everyone. On the proceeds comes the opportunity to buy it on credit. The main condition for lending for the purchase of equipment is the borrower's own contribution. Sometimes it can be from 20 to 50 percent of the loan amount. The term of such loans is not more than five years.
- Loan for replenishment of working capital. This is a short-term type of loan. The purpose of this product is replenishment of current assets (purchase of goods, raw materials, consumables, etc.).
- Overdraft is a short-term loan. A kind of loan without collateral for legal entities and entrepreneurs. The term of such a loan is one month. A mandatory condition is the zeroing of the overdraft each month and the revision of the limit. Basically, banks set a limit depending on the volume of turnover on the current account. In other words, an overdraft is an opportunity to go into negative on a current account for a certain amount.
Factoring as a type of credit has been offered by bankers quite recently. The role of factoring is to provide the enterprise with cash, in the event that the enterprise has sent the goods, and there is still no payment for it. The enterprise-seller on the basis of the contracts concluded with the buyer applies to the bank with a request for factoring. The bank considers the situation and proposes to make an assignment of payment for the goods from the seller to the bank. The bank pays the seller some value of the goods sold, and the buyer, in turn, is calculated not with the seller, but with the bank. After the final settlement with the buyer, the bank returns to the seller the balance of the money received for the goods. For this type of lending the seller pays the bank some commission.