If you need resources to start your activity and require an investment (premises, technical equipment, vehicles, tools …), you can access a loan, leasing or renting. If you need to have liquidity (cash) for the daily activity of your company, you can cover it with credit policy, commercial discount, factoring or confirming.
INTEREST: is the amount of money that financial institutions charge us for lending us money.
What interest rates are there?
– APR ( Annual Equivalent Rate or Effective Annual Rate). It is the annual interest rate that corresponds to financial operations. It is used to homogenize different types and conditions of credit and deposit operations when there are different settlement periods, expenses, commissions … and allows to compare between different offers that contemplate different nominal conditions and / or payment periods. This rate reports the real cost of money since it includes in it the nominal interest rate, plus the expenses and commissions charged by the operations.
– Fixed interest rate. An interest rate that does not change for the entire period of the loan, credit or loan regrouping. This rate is usually higher than the initial variable interest rate since the bank or savings bank assumes a higher risk.
– Variable interest rate. It consists of taking a reference rate and a differential. This interest rate fluctuates with the markets or with the rates of the reference indices. An example of a variable interest rate is given in standard mortgages.
2. COMMISSION: it is an amount charged by the financial institution as compensation for its work or for the services provided by intermediation and management.
What kind of commissions are there?
– Opening commission: Amount paid when formalizing a loan in consideration of the administrative and management expenses that its opening entails. It is paid only once upon completion of the operation and is usually a percentage of the capital loaned.
– Commission for cancellation or full early amortization. It remunerates the entity for the administrative procedures corresponding to the actions it must carry out, as well as compensation to the entity for what it stops earning when it stops receiving interest on the outstanding capital of the loan.
– Partial early cancellation fee. Amount paid when a contract ends before the expected expiration date.
– Subrogation commission. It is the amount of money that the financial institution receives when formalizing the change of debtor (the client) of the mortgage loan, to cover the administrative and management expenses of the loan. It is usually on the order of 0.5% and 1.0%. It is analogous to the opening commission on new mortgages.
– Availability commission. Amount charged to the customer for the opportunity cost of having the money available to the bank. It is very common in lines of credit.
– Commission exceeded. It is a commission that is calculated based on the amount of money exceeded, that is, the largest debit balance in the account (“the red numbers”).
3. EXPENSES: other expenses of third parties proper to the management of the operation are contemplated.
What are the most common expenses?
– Appraisal. To verify the market value of a property.
– Sure. In some cases, the financial institution may require the contracting of a policy to ensure the acquired property.
– I would notice. When it comes to credit operations or loans with mortgage guarantees, banks require a public deed of sale and purchase of the property, constitution or cancellation of the mortgage.
– Registration. When the credits and loans are guaranteed with the real estate mortgage, both your mortgage and the cancellation must be registered in the property registry of the area where the mortgaged property is.
– Fire and damage insurance. Mandatory by law in the case of real estate operations with mortgage loans.
– Tax on capital transfers and documented legal acts. Substitute for VAT in the case of acquisition of real estate or second-hand goods.
– Management. Processing costs before the registry or at the tax settlement office.
– Notary public. In commercial operations, giving authenticity to commercial operations and contracts.