In everyday life, we are often faced with the need to obtain a loan. A loan is a bank's operation to provide the borrower with funds on the terms of payment, repayment, urgency and guarantee. In a broader sense, credit is an economic value category, an integral element of commodity-money relations.
Instructions
Step 1
Remember that credit in finance is a relationship between two parties in which one of them provides the other with some value (money, securities, precious metals). In this case, the borrower undertakes to return them on time and pay interest for use.
Step 2
Please note that values, as a rule, are money, provided under a loan agreement. It specifies all the basic terms of lending: debt repayment period, interest rate, loan security. Credit can be provided by banks and other credit organizations, for example, microfinance centers, manufacturers when selling their goods and services, and retail companies.
Step 3
Most of us are faced with a loan in its classical sense, i.e. a cash loan, when one of the parties is a bank, and the other borrower is an individual or a legal entity. But remember that the parties in a credit relationship can be two legal entities, state and municipal organizations, insurance companies, etc.
Step 4
Do not associate credit exclusively with the banking sector. There are many other types of loans that are currently quite popular. For example, a commodity loan, which means the transfer of goods for a certain period with subsequent return. There is also a commodity-money loan, when it is understood that the credit institution transfers money directly to the seller's account, and the client returns the money to the bank. This form of lending is common in some market segments: mortgage lending, car loans, etc.
Step 5
The main thing that should connect the two parties in a loan is the coincidence of the interests of the borrower and the lender. This situation is possible if the lender has free funds and the borrower lacks them. At the same time, for the approval of a credit transaction, it is crucial to determine the amount, term, security and payment for the provision of funds for temporary use.
