Bank loans – how the consumer is protected

Here is some news that will allow a concrete implementation of the rules present in the Banking Consolidation Act. The rules, in particular, concern the subject of real estate credit to consumers. But what are they? And why could they positively impact the protection of consumers and users of credit services?

More transparency on the part of the bank in bank loan agreements

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The first point on which the ICR focuses is the search for greater transparency . This is an element that is at the center of legislative innovations. However, he has not always had the opportunity to go along with a concrete development of the possibility of making the information issued by the banks to customers fully correct, clear, comprehensible and not misleading. Specifically, the ICR wanted to intervene on the communication tools used . The ICR has also intervened on the possibilities of customization based on the specific needs of the consumer, on the possibility of being able to arrive at a more rapid comparison between the various credit offers on the market and thus allow the consumer to evaluate the relative conveniences, arriving at a decision more aware.

More specifically, the ICR has established that when information is contained in documents . The same must be drawn up using methods and techniques that can ensure the best graphic readability, syntactic simplicity, lexical clarity, structure logic. The documents must also be presented in a manner consistent with the communication tool used.

Advertisements on bank loans

Advertisements on bank loans

With regard to the advertisements , in its document (art. 4) the Cicr expressly requires that the announcements relating to credit agreements be disclosed in a manner consistent with the provisions of European legislation and pursuant to art. 120-octies of the TUB. They must also contain ” a clear, concise and realistic representative example “. Advertisements that do not include the interest rate or other figures that may constitute a summary indication of the cost of credit, will specify their nature as an advertising message. They must then indicate that the documentation required for the pre-contractual information is available to customers.

Pre-contractual information regarding bank loans

An ample passage in the document of the ICR is dedicated precisely to the subject of the pre-contractual information , mentioned above. In particular, in the art. 5 co. 2 it is recalled that before the conclusion of the credit agreement the lender must ensure that the consumer ” can easily and freely obtain clarifications that allow him to assess whether the proposed contract is suitable for his own needs and his financial situation “.

For the aforementioned purposes, the lender (the credit institution) must have organizational and internal control procedures. These must have as their object the methods and scope of the assistance to be provided to the consumer, ensuring that the clarifications meet three fundamental characteristics.

  • a) respond to the questions asked by the consumer on the pre-contractual documentation provided, on the characteristics of the proposed contract and the effects that may derive from it following its conclusion;
  • b) can be obtained by the consumer orally or in any case through distance communication techniques that allow individual interaction;
  • c) are provided by personnel with adequate and up-to-date knowledge of the credit agreements offered, consumers’ rights and the discipline adopted pursuant to the decree in question.

Bank loans in foreign currency

Bank loans in foreign currency

Finally, some news concerns foreign currency loans . In particular, the Cicr document states that the consumer has the right to convert the foreign currency in which the credit is denominated, pursuant to Article 120-quaterdecies of the TUB. This can happen when, compared to the time of the conclusion of the contract, there has been a change in the exchange rate equal to or greater than 20 percent.

More concretely, in order to be able to exercise the conversion right, the decree establishes a non-gratuity clause. It is envisaged that the consumer may be required to pay the lender, where provided for in the credit agreement, an all-inclusive fee. This remuneration must take into account the nature and extent of the charges that the lender may be required to bear in relation to the conversion of the loan in a currency other than that in which the loan was denominated at the time of conclusion of the contract.

Credit Agreements Also Applies To Insurance Contracts

Anyone who is interested in a loan and is already in an advanced stage of the decision is usually confronted with a topic that means there is residual debt insurance . Most loan providers submit at the latest with submission of the loan agreement most credit customers also the conclusion of just that insurance. For a good reason, because the banks earn good money with the mediation of that supposedly helpful and therefore recommendable insurance. Some credit providers even go so far as to make the awarding of a loan dependent on the conclusion of such a residual debt insurance. An approach that is often observed, especially with credit customers with weaker credit ratings. But residual debt insurance policies are far from being as recommendable as many a bank adviser wants to (or perhaps has to) negotiate. Our little guide explains whether this insurance makes sense, what to look for and how to get out of a corresponding insurance contract again.

Remaining debt insurance for loans are usually significantly overpriced

 Remaining debt insurance for loans are usually significantly overpriced

Even if the bank adviser is still so flowery, the residual debt insurance is not worthwhile for the borrower in most cases. So it is not surprising that consumer protection experts as well as lawyers never tire of warning against the conclusion of such insurance. Because in addition to a fundamental question in terms of necessity, the criticism of the experts is above all on the cost of a residual debt insurance. Especially the costs are often incomprehensible and transparently calculated for laymen. The result is the conclusion of consistently overpriced tariffs. Because on average, the premiums were about 13 to 17 percent of the required loan amount. Significantly too expensive, which was also in 2014, the district court in Nuremberg.

Known evil: residual debt insurance does not pay

 Known evil: residual debt insurance does not pay

However, in addition to the still far too high costs for this type of insurance, there is another factor adding to the value of credit for absurdity. The willingness to perform. Experts and market observers increasingly recognize that the insurance simply does not pay in the case of benefits . The crux lies in the terms and conditions of the insurance, in which many supposed and common benefit cases from the outset limited, if not completely excluded. For example, a sick leave may be the basis for a refusal to work. Which must lead to the realization that the high costs and insurance premiums are in no healthy relation to the actual available performance.

Remaining credit insurance is not mandatory

 Remaining credit insurance is not mandatory

What consumers who want to take out a loan should know is that banks are not allowed to take insurance as a condition for granting a loan . However, if the bank insists on such a degree, you should look for another bank as a consumer. But even if under the credit agreement, which is present together with the consent to a residual debt insurance, a signature has been made, the insurance can still be terminated. An action that is absolutely to be supported. This possibility exists in particular if, for example, a loan is rescheduled or repaid prematurely. Because here arises a special right of termination. Which means that in such a situation the insurance purpose is eliminated. Here, a completed insurance may be terminated and without a notice period must be respected. As a borrower, you should then ask the insurer to repay the premium pro rata.

Exit option: Incorrect cancellation policy

 Exit option: Incorrect cancellation policy

What applies in the case of credit agreements, also applies to insurance contracts: incorrect cancellation policy. A circumstance that is not necessarily aware of every consumer yet, but is of immense importance. Prerequisite for the revocation is that the instruction for revocation was not executed correctly . After all, over 80 percent of the loan agreements that were concluded before mid-2010 include a cancellation policy that is incomplete or incorrect . Because of this, until a few months ago it was possible to reverse an old loan agreement. Even if the deadline for revocation expired long ago or even if the loan was already paid off. As a customer you can therefore get out of the contract. The paid insurance premiums must be partially reimbursed in case of a confirmed, incorrect cancellation policy – at least!

 

 

With the Signature under the Loan Agreement, the Borrower Confirms the Loan

A loan – whether it is a mini-loan or a real estate loan, for example – is a practical matter and, in most cases, easy to obtain and repay. However, every consumer who takes out a loan should know that it enters into a binding contract with the borrowing, which inevitably results in various rights and obligations that apply to the borrower, or which he must meet. Before a loan is taken, an overview of these rights and obligations should be obtained.

 

Borrowing and the rights of borrowers

 

 Borrowing and the rights of borrowers

When a loan is taken out, the lending bank has to comply with certain obligations, from which the rights as a borrower are derived. These are >>

    • Timely disbursement of the loan amount

      The first and most important right for the borrower is, of course, the right to a timely payment of the loan amount. A credit agreement concluded in writing (only such a contract is deemed to be legally void; electronic or telephone credit agreements are null and void.) Each borrower must also receive a copy or copy of the contract signed by the bank) guarantees the borrower that the loan is the exact one paid sum. The legal claim is valid as soon as the required documents have been signed and submitted by both parties.

       

    • information law

Every borrower has an ongoing right to information. This means that he is always allowed to inquire about his interest and principal payments as well as the outstanding loan amount. In many cases, credit institutions, because they know that borrowers are happy to be informed of their account balance and the outstanding loan amount, will send out a statement of interest paid and repayments at least once a year anyway. Also, the loan status is always apparent from these submissions.

  • cost transparency

    The nature of the loan, the amount of the loan, the duration of the loan, the collateral to be provided and the interest payable are set out in the loan agreement. This also means that the exact costs associated with taking out a loan need to be regulated in the contract and made absolutely transparent to the borrower. Thus, there may be no hidden interest or other additional costs. Also, the processing fee, which was required a few years ago by many banks and which amounted to between 1.0 and 3.5 percent of the loan amount and was required for example for the administrative burden or the credit check, there is no longer. The Federal Court of Justice ruled in 2014 that these additional costs are inadmissible.

    One exception is the so-called residual debt insurance. If, at the request of the borrower, a residual debt insurance is taken out for the loan, the costs for the same will also be incurred. However, conversely, if the bank requires the borrower to conclude an RSV, the costs must be added to the effective interest rate.

  • Issuance of deposited securities after full repayment

    After a full and proper repayment of the secured loan, the lender must return the collateral to the borrower, or he must “transfer” it to him. Among other things, this relates to the return of stored vehicle registration documents or other valuables. The borrower is also entitled in the same way to demand a cancellation of the mortgage granted by the bank in the case of a paid-off mortgage loan. Insurance policies may also be required by the lender after repayment of the loan, if these were part of the contractual arrangements.

  • Withdrawal

    Anyone who receives a loan of any kind as a private person, always has the option of revoking the contract within 14 days. This too is required by law. However, there are also some banks that grant significantly longer withdrawal periods. Also for the so-called zero-percent financing , the right of withdrawal applies. With regard to the right of withdrawal, exceptions may be employer loans, subsidized loans or even loans with extremely small amounts or even short terms – for example, up to three months.
    In principle, it is possible to revoke it by simply sending a simple notification of this request via e-mail. Anyone who has revoked a loan can then return the borrowed money to the lender within 30 days. However, in this respect, too, all banks are differently cultured. Lenders are allowed to charge for the period between receipt and repayment of interest, which are calculated exactly to the day. However, many banks do without those amounts.

As a private individual, any loan agreement can be revoked within 14 days. fotolia.de © Stock Photos-MG (# 134325308)

 

  1. Early loan repayment

    Early repayment is the most common form of early loan repayment. It refers to the right or possibility to liquidate an existing loan in its current form in order to normally use cheaper interest rates for financing. Also, the economic freedom of movement of the borrower can be an influencing factor that influences the decision for an early repayment.

    In general, there are several ways for borrowers to break away from the loan. Possible:

    1. The rescheduling of an existing loan without termination effect
    2. The revocation of the declaration of conclusion of a credit agreement
    3. The termination of an existing credit agreement

    The agreement of debt rescheduling with the bank, in addition to the termination of the second, somewhat unusual, but still legitimate way of replacing an existing loan. In many cases, there is no need for a rescheduling prior notice. Instead, the previous loan will be continued on a new basis. There is then a mutually agreed contract amendment instead of a termination of the contract. The rescheduling may involve the agreement of a cheaper interest rate to the borrower or have the goal to combine several loan liabilities into one loan.

Consequences of early loan repayment

Consequences of early loan repayment

When terminating a standard installment loan, unlike loans secured by mortgages, there is no financial compensation obligation in the form of a prepayment penalty. Nevertheless, the loan terms and conditions of credit institutions occasionally contain clauses which stipulate the payment of a prepayment penalty even in the event of a premature repayment of a simple consumer credit agreement. Since these are also not prohibited by installment loans, banks can use this force of the principle of freedom of contract to their credit agreements.

The obligations of borrowers

 

After it is clear what rights a borrower has or can claim for himself, it goes without saying that the same applies to obligations as part of a loan transaction for the borrower. These are >>

  • Obligation to provide information upon application (credit report), truth obligation

    Anyone who wants to take out a loan must be considered creditworthy by the bank. Credit standing, usually called creditworthiness, thus represents the ability and willingness of a customer to fulfill his future payment obligations in full and on time. As a rule, creditworthiness is the one for which the likelihood is very high that a borrowed loan can also be repaid on schedule. The credit report, which is created as part of a credit check, provides information about the exact creditworthiness of a borrower and thus also about the probability of default risk.

    Borrowers are also required to ensure that all information provided in the context of lending is true. Only then can lenders conduct a necessary and detailed risk assessment. For this in turn, lenders are obliged – because loans may, legally prescribed, only be awarded with sufficient security. Almost any information about the borrower for the lender here is also information about a risk. Be it the wealth and income relationships, personal data on family relationships or even the professional status of a borrower – all of this can be more or less secure or uncertain and involve risks to solvency. With regard to the professional position one thinks about the different protection of different employment relationships, for example against the loss of a professional position.
    If the information provided by the borrower in the credit agreement is not true, this constitutes a significant criminal offense in cases of doubt, such as fraud (credit fraud). This is therefore also punishable by the Penal Code with correspondingly high penalties.

    The agreement of debt rescheduling with the bank, in addition to the termination of the second, somewhat unusual, but still legitimate way of replacing an existing loan. In many cases, there is no need for a rescheduling prior notice. Instead, the previous loan will be continued on a new basis. There is then a mutually agreed contract amendment instead of a termination of the contract. The rescheduling may involve the agreement of a cheaper interest rate to the borrower or have the goal to combine several loan liabilities into one loan.

By signing the loan agreement, the borrower confirms that he has met all the information in a truthful manner and repays the loan amount on the agreed date. Istock © stadtratte (# 625505870)

 

  • Timely repayment of the agreed installments

    The main obligation of each debtor is, of course, the repayment (repayment) of the loan amount paid out, or the agreed installments and the payment of the specified loan interest in compliance with the contractually fixed payment dates. The borrower also undertakes to provide, to some extent, no financial problems that could result in the loan being unable to be repaid. If the borrower does not repay the loan amount as agreed, the lender has the right to charge the borrower with a stand-by interest. From what date and in which amount the commitment interest has to be paid must be agreed in the credit agreement.

  • duty to inform

    In addition to the obligation to provide information, which applies to the borrower in the application process, there is still the so-called information obligation. This is the obligation of the borrower to inform the lender at all times during the term of the loan, if there are serious changes in personal data and circumstances. This can be a change of address, but above all a serious change in financial circumstances. These include, for example, the loss of a job or even a divorce. In such cases, the bank is generally keen to find a short-term solution with the borrowers.

Paperless Personal Payday Loan – Do You Have It Here? Where to Find?

Is this true! Now it is possible to get a paperless personal payday loan in Brazil! It is not just a matter of getting rid of the trips and the stores and agencies and receiving the requested resources, but also dealing with speed of service and all the documentation involved in the process.

What is paperless personal payday loan?

 

What is paperless personal loan?

 

 

When the Brazilian economy, the majority of the population is out of money, and there is no reason why personal payday loans continue to be made in the same traditional way that has been in recent decades, including a lot of paper documentation.

With the paperless loan, you save a great deal of time by getting the loan approved in a few clicks without there being at least human intervention in the transaction except when there are complications or errors in the information. The paperless personal payday loan today is the fastest, most effective and simple process for the lender and for the borrower.

 

Benefits of Borrowing a Paperless Loan

Benefits of Borrowing a Paperless Loan

 

  • The request is processed online. No need to visit shops, offices or banks.
  • There are no physical documents required. Everything, including bank statement and proof of identity, can be sent online for the loan to be approved.
  • Fast loan. It can be approved within 3 to 5 minutes if all the information is correctly provided with the site or application.
  • Little bureaucracy for approval. If you prove the ability to repay the loan amount the chances of approval are immense.
  • Your information is 100% secure.
  • Interest rates are lower than the banking system.
  • Rebate of money requested on the same day or up to 24 hours.

How to start Instant Paperless loan application?

 How to start Instant Paperless loan application?

Who wants to take advantage of the paperless loan benefits, all that needs to be done is simply filling out an application form online on the website or in the application. This application is processed instantly and shows the best credit offer that the requester will be qualified along with other details.

If you choose to agree to the terms, upload all required documents and continue. Once this is done, a welcome and other information is generally sent to the requester to check all details and understand the loan requirements in question.

If all goes well, just check the personal payday loan offer and sign the loan agreement. Once the system receives the signed contract, the value of the loan will be sent to the bank account of the borrower.

The steps may differ for each lender, however, when applying for a paperless personal payday loan or instant loan, the most common is:

  1. Visit the page or download the lender’s application.
  2. Provide necessary details on the form.
  3. Send “Self” Ringtone to your Cell
  4. Send all digital documents (without physical documents).
  5. Get an offer with specific details.
  6. Receive a welcome notification after the application checks.
  7. Get assistance from financial advisors in case you need to resolve issues
  8. Make sure the loan offer is worth it to proceed.
  9. Get the loan agreements to sign and return to the lender.
  10. Receive the requested amount in bank account.

Filling out the online personal payday loan application form is the first step where the applicant can connect with the lender to inform their credit need. After validating all the details on the application form, the lender will process the loan and help the requester follow the next steps to get the loan amount into your bank account.

The paperless personal payday loan also facilitates the life of the borrower requesting. Everything happens in the 100% online environment, there is no need to leave home or work to complete the application process. In Brazil, everyone is already closer to digitized financial transactions.

Interest rates on paperless online personal payday loans

Interest rates on paperless online personal loans

 

The interest rates on paperless personal payday loans and personal bank loans are practically applied in the same way. The paperless transaction is just another mechanism to make life easier for credit borrowers, eliminating the tedious paperwork process.

How different are the terms and conditions on loans

 How different are the terms and conditions on loans

Whether your personal payday loan is in paperless or traditional format, the terms and conditions do not change much. The importance of going through the terms and conditions is essentially a standard regardless of the type of personal payday loan.

The paperless personal payday loan is not a discount offered to the borrower, instead it is just a convenient facility to approach the customer’s potential lender to the digital economy. However, online lenders will stop charging higher rates since everything is done online and faster than ever on paperless loans.

With the help of the online documentation, users with access to the internet by cell phone, smartphone, tablet and other devises can achieve the best of both worlds, financial and digital.

Paperless loan in just a few clicks

 Paperless loan in just a few clicks

A paperless personal payday loan described in a simplified way means borrowing an online loan with online registration, fast processing, and requesting credit for your home, office or work at any time during the day (24 hours) without paperwork and paperwork.

Make your paperless loan in just a few clicks, with approval in minutes and account money in less than 24 hours.

The Positive Consumer Behavior for Installment Loans

A common opinion: If the economy is doing well, this is always reflected first in the positive consumer behavior of the citizens. The positive consumer behavior in turn could result in large parts, the installment loans are currently extremely cheap again. In addition, if you just look around in the financial world, then there seems to be cheap lending rates almost everywhere. The banks outdo themselves again and again with new and favorable credit offers in search of new credit customers.

No question, then, that the persistence of interest-free lending has enormously reduced installment loans. But is it really true that the currently cheap installment loans really have an impact on the consumption behavior of Germans? If you look at current statistics, you can answer this question with a clear “No”. Although consumer behavior is actually increasing, this is not due solely to an increase in cheap installment credit. What – with leave – anything else would be positive!

Germans have 2750 euros of debt per capita

Germans have 2750 euros of debt per capita

 

To illustrate this once in numbers: The sum of all loans to German citizens in 2014 was 222 billion euros. In Germany, the average debt per capita is currently 2,754 euros. Here, the decline in population and demographic change is noticeable, as in the previous year it was still 2,716 euros. Even though the per capita debt of around 2,750 euros does not seem particularly high, Germany is still among the top five in European comparison. Lone leader is by the way Norway with around 5,500 € per capita debt.

Installment credits should now be raised

Installment credits should now be raised

 

Even if numerous statistics prove that low interest rate loans resulting from a current low interest rate do not inevitably boost consumption as well, one should still take advantage of the currently low-interest rate installment loans, if greater purchases are planned. However, one should never lose sight of the fact that loans, which were concluded hastily, then often then the most expensive loans are – low interest or not! Thus, an extensive comparison of as many credit providers should precede any borrowing – even in a low-interest phase – without limitation. The more detailed the comparison of various credit offers is carried out, the greater the financial savings can be achieved – depending on the loan amount, even several thousand euros can be realized!

 

The Principal Borrower Does Not Service the Due Credit Installments

Granted that both statements and the documented behavior have their justification. Who would help a really good friend in a financial emergency to the best of his knowledge and endowment? Finally, he / she would do the same in a reverse case – right? But people who think and act that way can usually confirm the other sentence as well. Not a few have experienced at least once in their lives that money really stops the friendship. So what if a good friend or family member approaches you with a request to vouch for a much-needed loan? No problem – pure formality? Not at all, because that’s not what a credit guarantee is. It sometimes entails not insignificant risks and you should be fully aware of them. At worst, their own existence is at stake here!

Need for a loan guarantee is synonymous with increased credit default risk

 Need for a loan guarantee is synonymous with increased credit default risk

The fact is that the need for a loan guarantee is always a clear indication that the bank is expecting a loan with an increased risk of default and therefore expects a corresponding hedge. The extended coverage of the loan is done by using a second source of money, which can be accessed immediately in case of installment failure. Plain: Credit bureaus are considered second borrowers and all related obligations under the loan agreement. Completely insignificant from the point of view of the bank, in which relation one stands to the main borrower. Whether a spouse, another adult family member, a relative or a friend acts, this does not matter at all. The only thing that matters is the second signature of a solvent person under the loan agreement. However, that signature is all too often done out of pure friendship. And without worrying about the risks this guarantee can bring.

The loan guarantee and its risks

 The loan guarantee and its risks

For with a guarantee applies: One is liable for the entire loan amount including interest. What this means is that if the principal borrower does not service the due credit installments, one is called to act as a guarantor to pay the loan installments. In addition, a loan guarantee due to the status of “second borrower” is also reported to various credit bureaus – above all SCHUFA. Such an entry constitutes a burden on one’s own credit score, which can be detrimental to a later acceptance of a loan for one’s own purposes. For example, in the form of poorer credit terms. For even if you are not the actual (principal) borrower, the guarantee assumed for another represents a risk for each bank. This risk is based on the assumption that the actual borrower may not be able to pay the installments any more and you may Finally, Bürge has to take over the entire loan. One should therefore always ask the question: am I prepared in an emergency for the debt of another person, no matter whether friend, family member, partner, etc. to pay in an emergency?