How to get rid of a bank loan



Contents

  • 1 loan
  • 2 How to get rid of a bank loan
  • 3 characteristics of bank loans
  • 4 bank loan positions
  • 5 levels of bank loan risk
  • 6 References

The loan

The loan is considered a form of financial debt and is invested in consumption or production, and depends on the presence of a certain time period, and trust between the loan owner and the borrower. With the addition of bank guarantees to ensure that he gets his money when the borrower stops paying, the loan is also considered the concept that is used to refer to financial exchanges, and it is based on paying the money back within a predetermined time. [1]

How to get rid of a bank loan

Many people who have obtained bank loans are looking for suitable ways to help them get rid of these loans, and here is a set of tips that help get rid of the bank loan:
  • Communication with the bank: It is talking to a bank employee about the problem of disposing of the loan, and trying to find an appropriate way to repay it, such as stopping the payment of the interest value of the loan. [2]
  • Preparing a personal financial budget: It is a method that helps the loan owner know the movement of his personal funds, which contributes to determining the amount of expenses in excess of the need, the value of which can be allocated to pay off the value of the loan. [2]
  • Sale of assets or property resulting from the loan or redundant: It is the method used by people who lose the ability to pay the loan they owe, and who obtained it with the aim of buying a specific asset as a property or car, therefore, the person is forced to sell the asset that he bought with the borrowed money or not The employee or who has exceeded his need, so that he can pay back the resulting loan. [3]
  • Paying more sums of money than the minimum value allocated for payment: It is a method of disposing of the bank loan; by making more payments than the value of the monthly installment of the loan, for example, if the loan's installment amount is 100 dinars per month, it is possible to pay 150 dinars to speed up the disposal Of the loan in the event of a financial surplus available to the owner of the loan. [4]
  • Obtaining an additional part-time job: Is the bank loan owner obtaining a job other than his primary job, so that it contributes to increasing his income and getting more cash to pay off the loan amount that is due. [4]
  • Paying off the value of the debt: It is the disposal of personal debts with large interest rates, which contributes to collecting the debts together within only one loan, and this helps to follow all the processes of paying the loan value in an easy way. [2]
  • Getting help to pay off the loan: It is the use of a charity that provides advice and assistance on how to repay the loan. [2]
  • Searching for a decrease in interest rates: It is seeking to secure a low interest rate on the credit card in the event that the interest rate is high, as the request to reduce the interest rate is a very common request, especially if the borrower has a distinguished history in paying the loan installment bills Consequential. [4]
  • The use of money generated by chance: is the use of money from unusual sources of income to pay off the loan, such as money resulting from a job bonus, inheritance money, or annual financial increases in wages. [4]
  • Get rid of expensive habits: It is the evaluation and study of personal habits with the aim of eliminating the expensive habits that affect the payment of the loan, such as stopping eating daily meals ready from restaurants. [4]

Bank loan characteristics

The bank's loans are distinguished by a set of special characteristics, namely: [5]
  • Loan value: The amount of money determined according to the type of loan and the bank responsible for it.
  • Duration of loan repayment: It is the period of time to finish paying the loan amount, and this period varies based on the financing of the loan.
  • Interest rate: It is a ratio that depends on the type of loan and the bank responsible for it, and there are a set of factors that influence the determination of the interest rate , which are: the effect of the central bank in setting minimum and upper limits for the value of loans, the costs of the loan, the risk ratio, the nature of competition, and special flexibility On demand, loan repayment period and loan value.
  • Loan collateral: These are obligations to repay the loan offered by the borrower, and may be financial or in-kind.
  • Method of repayment of the loan: There are several ways to repay the loans, which are:
    • Repayment with a fixed interest amount: is the payment by the borrower of the value of the loan and its interest according to a fixed amount of money over the life of the loan.
    • Repayment with variable interest rate: It is the borrower's repayment of the loan at a rate of variable interest ; that is, its value may decrease or increase during the life of the loan.
    • Repayment according to two phases: The borrower repays the loan amount according to two phases; part of its value is paid using a fixed interest, and the other part is paid using a variable interest.
  • The goal of obtaining a loan is to determine the reason for obtaining the loan, such as using it in a specific activity or financing a new project.

Bank loan jobs

Bank loans contribute to the implementation of several functions, the most important of which are: [6]
  • Financing the productive process: it is the role of loans to provide financial needs for the various productive processes, as it is difficult for all producers to provide their capital needs for the continuation of their production; therefore they turn to banks to obtain the appropriate financial financing, which is in the form of a financial loan.
  • Financing for consumption: it is the provision of loans the possibility of deferred payment for consumer products due to the inability of many individuals to pay for some types of goods from their own income, and this leads them to resort to loans so that they can pay for these goods according to the method of installments.
  • Settlement of exchanges: It is the contribution of loans to absolve financial receivables between the debtor and creditor parties through the provision of credit facilities in the form of current accounts, and this function is one of the important functions of loans because of its role in financial exchange settlements.

Bank loan risk levels

Bank loans result in a group of risks that are divided into the following three levels: [7]
  • The risk affecting the debtor: it is the risk of the loan resulting from the misconduct of the loan owner, and is linked to the commercial, industrial and financial condition of his establishment, as the owner loses the appropriate skills to manage and manage the risk.
  • The risk affecting the beneficiary's activity: the risk that results from changes related to the type of activity for which a loan was obtained, such as changes in the prices of raw materials, the emergence of external competition, or the emergence of social effects, as this level of risk is called the occupational risk.
  • The risk that leads to a general crisis: It is the risk that is associated with an economic impact that negatively affects the economy of a particular country, such as the emergence of an economic crisis, and results in events that were not within expectations.

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