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Financial Education

Bank Credit

The financial world is a universe that most people have a hard time understanding. With this page we have tried (we hope to be able to) to demystify some concepts and bring to our clients / readers some of the best practices for a healthy and safe financial life.

With the subject of Bank Credit we intend in this chapter to clarify some concepts and help our clients to identify the credits that meet their needs, providing them, of course, with the fulfillment of their dreams. 

The third chapter of our Financial Education page brings a topic that can be defined as a facility that makes many people's dreams come true. 

Today we will talk about Bank Credit, a complex topic that raises some doubts for people, especially when they need to request this service from their bank. As it is a vast subject, we will address key issues that will help the reader to clearly understand the concept, the advantages and to demystify some complex terms related to this theme.

Track and understand everything you need to know from the time of researching the types of loans to acquiring them. 
What is bank credit?
For the definition of Bank Credit, we analyzed the term Credit in the dictionary (from the Latin credit), which means the confidence you have in something. Its application to the financial sector refers to nothing more than a contractual relationship between two parties: the Bank or a financial institution and the customer.
 
When requesting a credit from your bank, it is nothing more than borrowing money, anticipating the consumption of the future to the present (in contrast, in savings, the customer postpones the consumption of the present to the future). It is true that in order to assess whether credit is the right option or not, it is necessary to know its cost and assess whether its utility justifies the payment of that cost. An alternative to credit is to collect the money for a few months and then make the purchase in cash.
 
A very important point to be taken into account is that in order to access credit, it is essential that you have sufficient income in the future to pay the creditor the amount granted, plus interest. Therefore, the research phase is important so that doubts are clarified and the decision to acquire a bank loan is conscious and safe.
Precautions to be taken in requesting bank credit
Credit solutions available on the market are vast. Caixa can help you with this task, with in-depth advice and clarification on Bank Credit.
 
When a credit is granted, a borrower's first responsibility is to repay or return in a timely manner what has been made available to them.
 
If the debt occurs in a favorable economic and social context (economic growth, job stability and income), it contributes to the increase of the well-being of the populations and to the increase of the quality of life of the families, becoming, thus, an instrument for the economic development of their societies.
 
It is of utmost importance that the use of credit is made in a rational manner, considering not only the future benefits that will come from it, but also the possibility of unforeseen events in life, which may compromise the payment of contracted obligations. 

The consumer must always be aware that, by splitting future income to provide for the satisfaction of current needs, he is especially vulnerable to any unforeseen events that could jeopardize his future financial capacity.

That is why Bank Credit must be analyzed calmly, so that the consumer is aware of the opportunities but also of the risks that arise from it. 
 
Banking credit tips
We have prepared a set of tips to facilitate your decision to apply for a Bank Credit.
 
Follow:
 
  • Before applying for the credit, carefully review your monthly financial situation to confirm that you have budgetary leeway to support future installments of the desired credit. Request only the amount of money you will be able to repay;

  • Choose your credit product well. To do this, you must first know the different products on the market, as well as the characteristics of each product and only then choose the one that best suits your needs;

  • Compare offers, analyze interest rates and commissions offered by different institutions. The most appropriate is to compare the APR (Annual Effective Rate), which reflects the total cost of credit, including interest, commissions, taxes and insurance;

  • Clarify all doubts that result from reading the credit agreement and the legal technical terms, so that there are no surprises in the future. Obtaining as much information as possible, in particular on repayments, non-payment, changes in the term and interest rates, is crucial;

  • If you have multiple credits and are in over-indebtedness, consolidating multiple loans into a single loan can help you reduce monthly charges. Talk to your bank and renegotiate your debts;

  • Always have emergency savings to deal with unforeseen circumstances without touching the money to repay your loan.
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