More than half of the country's working population faced loans. When applying for a loan from a bank, the client reimburses not only the amount of the loan, but also the accrued interest, and in case of delay, a fine and interest. Some borrowers are unfamiliar with the concept of loan debt and the rules for its formation.
Definition
Loan debt is the amount issued to the borrower in accordance with the terms of the loan agreement that has not been returned back to the credit institution. Debt is reduced monthly, provided that the established payments are paid off on time. The amount of debt may increase due to fines and penalties accrued in case of late payments.
The formation of loan debt negatively affects the credit history of the borrower. Making another loan can be very difficult due to late payments, which become the reason for the refusal or increased interest.
Kinds
Loan debt is classified into two types of maturities - term and overdue. The debt repayment period for the first category has not yet arrived; for the second, it has already ended.
Overdue debts are divided into three types:
- Expected loan debts are loans secured by a pledge or guarantee of a third party. For a banking organization, this option is the most optimal, since it has a high probability of a refund. In case of delay in payments, the borrower is withdrawn from the borrower or the bank’s specialists turn to the guarantor.
- Doubtful loans are unsecured loans. Both a natural person and a legal entity can act as a borrower.
- Hopeless. A loan that the bank cannot recover even after contacting collectors. Debt at the expiration of the limitation period is written off - such risks are pledged by the credit institution as a percentage of the loan. Bad debt is a debt recognized as such in the absence of official work by the borrower, property that can be withdrawn for debts, and a regularly replenished bank account.
Debt remains on the bank's balance sheet for five years. Many credit organizations write off debts ahead of schedule, because the fact of their presence negatively affects the company's reputation and reporting.
Debt Forms
Net loan debt means the debt of the borrower to creditors without interest or interest. To the net debt at the time of loan overdue interest is added, which increase the initial amount.
Banks in most cases simultaneously charge both the annual rate and interest on arrears. Their maximum value cannot exceed 20% per annum. In another option, the lender only charges interest at a rate of 0.1% daily.
According to the maturity of debt payments are divided into three categories:
- Current. It is subdivided into two types - with the absence of overdue interest and with the delay of less than five days.
- Redesigned. Debt may be reissued according to circumstances. This can be done twice without amending the terms of the contract. It is proposed to renew the agreement with amendments once.
- Overdue. Delay is only taken into account on the main debt.It, as a rule, is divided into several types according to established time periods: up to 5 days; from 6 to 30 days; from 31 to 180 days; from 180 and more days.
A credit institution has the right to write off debt only after three years - this period is regulated at the legislative level.
Loan account
When applying for a loan, a loan account is opened for each borrower. It opens after the conditions of the contract are signed, which stipulate the return of the full amount and accrued interest.
The loan account is intended to control operations carried out on the loan of the borrower:
- Unpaid interest.
- Monthly loan payments.
- Overpayments under the contract.
- Amount due.
- Possibility of early repayment.
The bank credits the full amount of the loan to the loan account, respectively, it is reflected in the debit. The amount includes not only net debt, but also interest accrued on it. All payments made by the borrower are reflected in the credit account.
The loan account is divided into several categories:
- Plain. Account opened for a one-time transaction. Financial institutions resort to this option for processing consumer and car loans.
- Special. An account required to regularly issue funds to a borrower. In practice, it is opened for credit cards. The client can perform any operations until the card expires. Banks provide bona fide payers with the opportunity to increase the credit card limit.
- Contract Account. Active-passive account, combining loan and settlement accounts. This option can only be used by legal entities. Revenues are recorded on the credit of the contract account, on debit - payments to the budget, salaries paid, amounts transferred to suppliers' accounts, and loan payments.
Loan account
A loan account is issued according to certain requirements:
- The basis for its opening is a loan agreement drawn up in the name of the borrower.
- For individuals, the service is completely free.
- Opening and maintaining a loan account is a paid service for legal entities.
One client can open several loan accounts, each of which corresponds to a certain loan. The billing service is not considered independent, since it is aimed at monitoring the ongoing loan operations.
Debt relief
The activities of credit organizations are aimed at maximizing profits with minimal own risks. A thorough check of customers by the bank does not exclude financial risks.
Loan arrears in most cases are not intentional; the main reason is the borrower's financial difficulties, due to which he cannot make payments on time. Often you may encounter situations in which delays last for a long time, but the bank does not have the ability to collect debt.
A credit institution ensures its own security against financial risks by creating a reserve for loan debt. It is used to write off debts of dishonorable customers. To perform this procedure, several conditions must be met:
- The end of the three-year limitation period.
- A small loan amount.
- Death of the debtor in the absence of heirs.
- The borrower is officially declared bankrupt.
Successfully getting rid of debts, declaring yourself bankrupt does not allow. Over the course of five years, written-off debt instruments are controlled. Throughout the entire period, the bank monitors the solvency of the client. Debts from the borrower in case of improvement of his financial situation are recovered through the court.
After the bank appeals to the court with a statement of claim, the borrower is obliged to pay not only the principal amount of the debt, but also penalties, interest and legal expenses accrued during the delay.There is an advantage for the debtor in litigation - the amount of debt can be officially reduced by lowering the coefficient of loan debt.
Amortization
The terms of debt repayment are stipulated by the drawn up loan agreement. Monthly loan payments can be of two types: annuity and differentiated.
Differentiated payments - proportionally decreasing amounts. The largest payments fall on the first quarter of the term, the smallest - on the last. Every month, the total loan amount is reduced by a certain amount, and interest is accrued on the balance. The difference in the amount of payments is due to the accrual of interest.
Annuity payments are the same throughout the loan term. Their proportions are different: at the beginning of the payment term, interest accounts for a large part of the monthly payment, but by the end of the term the bulk of the payments falls on the repayment of the main part of the debt.
Repayment methods
Borrowers, as a rule, are not interested in methods of forming loan debt and repaying payments, including differences in the payment system, despite the fact that differential payments are usually more profitable. Under a differential system, the first monthly payments on a issued loan of the maximum amount, but do not exceed half of the borrower's income, which is specified in the laws. However, the bank provides a limited amount, which is often disadvantageous for both parties.
Both cash and non-cash payment repayments are envisaged. In most banks, consumer loans are transferred to a card, to which the customer, in turn, credits a monthly payment, which is debited automatically on time.
Debt under a loan agreement can be written off both fully and partially. The second case involves recounting a monthly payment. Long-term repayment requires a bank statement. Some types of loans, loans and debts equivalent to them can be repaid ahead of schedule only after a certain period of time - for example, six months after the conclusion of the contract.
Coverage ratio
For financial institutions, profit is important. The goal is achieved in various ways, one of which is the formation of reserves for possible loss of loan debt. Banks can resort to calculating the debt coverage ratio.
The coefficient calculation procedure is performed for several purposes:
- Ensuring the sustainability of the company.
- Minimization of risks.
- Bankruptcy Prevention.
- Drawing up an objective picture of the situation.
The indicators specified in the business plan are taken as the basis for calculating the coefficient. The calculations are carried out according to the formula:
Ratio = 1 + (cash flow balance / loan debt).
The cash flow balance is the difference between the flow and outflow of funds. The optimal value of the calculated ratio is an indicator in excess of 1.15: the company may have available funds not aimed at repaying the loan. If the calculated indicator is less than the loan, then the organization does not have funds in an amount sufficient to pay the debt, respectively, the bank bears certain risks when issuing a loan to it.
Certificate of absence of loan debt
The absence of debt is confirmed by a certificate of loan repayment. The document is drawn up by the bank and is required to obtain a loan from another credit institution. Information on a repaid loan may not be received in a timely manner by the credit bureau, which may lead to problems for the borrower when applying for a new loan.
A certificate of loan debt may be needed when buying or selling real estate. The document confirms that there is no encumbrance on this property. The certificate is issued by the bank at any time.The procedure for processing a document is established individually for each organization.
The help contains the following data:
- Date of issue.
- Outgoing number.
- FULL NAME. and customer passport details.
- The legal address of the credit institution.
- The date of the contract and its number.
- Amount of the loan.
- Signature of a bank employee.
- Seal of a credit institution.
- Debt repayment date.
In most banks, the procedure for issuing certificates is paid: the price of a document rarely exceeds 350 rubles. Urgent charges may apply.
It is advisable to receive a certificate on the day of loan repayment, as this allows you to make sure that there are no overdue loans and that the client is fulfilling his duties. A written request is sent to the bank in case of its refusal to issue a document, while the organization must accept the application and put the appropriate mark.
Summary
It is advisable to familiarize yourself with the definition and characteristics of loan debt to everyone who wants to get a loan from a bank. You must have an idea of all the nuances of the process - such information may come in handy in the future.
