What are credits? Interesting facts about first loans, collateral, and interest rate

What do you do when you really want something, but you don’t have enough money to buy it right now? That’s right, you can apply for a loan or more simply – borrow money, which will allow you to carry out your plans and pay off the borrowed amount in installments over a fixed period of time. The habit of “borrowing” money arose many years ago before our era, back in Babylon, Egypt, and Assyria, where the first mentions of loans and creditors were attested.

The idea of CREDIT, which translates from Latin “I believe” or “I trust”, came with the desire of merchants to buy more goods than they could afford with the money they had with them. Thus, the first specialized credit institutions appeared. Their methods of work were almost identical to the current lending process: a bank or non-bank lending institution offers you the money you need, asking for INTEREST in return, and as a guarantee that you will return the money on time, something is taken as a COLLATERAL. Plain and simple – you just need to know the payment options, be able to calculate the total cost of the loan, and make your monthly payments on time.

Interest: an explanation for everyone

The formula for a loan is simple: you get the money and then you have to pay it back. In addition to the amount you borrow, you pay a percentage, called interest, for using the money when you need it. In general, interest depends on three important factors: the amount credited, the repayment period, and the rate. Interest rates can also be of two types: fixed (which remain unchanged throughout the credit period) and variable (depending on the evolution of the benchmarks).

When we talk about interest, we also need to know what the APR (effective annual percentage rate) means, or more simply what is the total cost of the loan. The APR contains both the interest rate and additional costs (other commissions and fees). It would seem that it sounds complicated, but in fact, you just need to capture the essence. In addition, lending experts are obliged to explain to you every step and calculation, but also to ensure that everything is clear to you and you do not have unresolved dilemmas.

Why do you need collateral when you take a loan?

When a bank or NBCO grants a loan there are certain risks, that the borrowed money will not be refunded. As a guarantee that the credit will be paid in full and on time, something is taken as collateral. The subject of the collateral can be various goods, depending on the amount of the loan. For example, in the Kwakiutl Indian tribe, there was an interesting custom: when someone took a loan, he pledged his… name. Thus, no one of the inhabitants called him by name, until he paid off the debt in full.

While we’re talking about collateral, there are few “strange” things some banks are ready to admit. For example, a bank in Italy receives Parmesan cheese as collateral. The reason is that in case of non-payment of the loan, this famous cheese will be very easy to sell. Credit Municipal de Paris is ready to take … collectible drinks as collateral. This option turned out to be successful from the very first days, the warehouse of the bank was filled with all kinds of expensive bottles.

A “responsible” credit will only bring you benefits

Credits are absolutely essential for the modern world because few people can afford to buy expensive things such as a house, a car with cash or to start a business that requires permanent investment for development and expansion. In this situation, it is necessary to take some correct steps to turn the loan into a situation from which we can only benefit:

Choosing the right credit (personal needs, business, agro, auto) – each has rates and interest suitable for the respective situations;
Determining the amount of money we need and the purpose of use;
Calculating individual payment possibilities and total loan price;
Collaborating with a responsible lender who will fully understand you and provide you with the best solution.

By the way, at Microinvest we offer loans for hardworking people to achieve their goals and ensure a nice and comfortable life.

Client's Name
Client's Surname
Personal Identity Number
Currency
Term
Rate
Amount
Monthly payment
Amount to receive
Purpose
Comments

1. Name and Contact Information of the Creditor
Creditor
Address
Phone number
Email Address
Web page

3. Costs of the credit
Rates related to the credit
Annual Percentage Rate of Charge (APR) This is the total cost expressed as an annual percentage of the total amount of credit. The APR is there to help you compare different offers	%
In order to obtain the loan in accordance with the agreed terms and conditions, it is mandatory to conclude an insurance contract to guarantee the loan or a contract for another ancillary service.
Related costs
Any other costs deriving from the credit agreement	Fee for services rendered in relation to usage of credit, calculated and paid as follows: of the credit and paid by the Debtor on the date of granting the credit from own sources or is deducted by the Creditor from the amount of the credit The negotiation / prolongation of the credit can take place by mutual agreement of the parties, by signing an additional agreement, the Creditor being entitled to request an increase in the interest rate within the limits provided by the legislation in force. In case of negotiation / prolongation of the loan, the Borrower shall pay to the Creditor, at the date of the negotiation / prolongation a commission in the amount of 2% from the credit balance at the time of negotiation / prolongation.
Conditions under which the costs related to the credit agreement can be changed	The Sides can change the costs related to the credit by written agreement signed by both parties; For the non-constitution of the guarantees within the agreed term, the Creditor is entitled to calculate, and the Client will pay to the Creditor an Interest of delay in the amount of 5% annually, applied to of the daily balance for each day of delay, starting with the date following the term established for the constitution of the guarantee/ s and until the date of the proper execution of the respective obligation.
Obligation to pay for notarial fees / mortgage registration fees / fees for noting the prohibition of pledge in the Transport Register related to the pledge of means of transport (agricultural machinery)	Paid by the Client , except as otherwise provided in the pledge / mortgage agreement.
The cost for the valuation of real estate proposed in pledge	Paid by the Client directly to the Evaluator
Costs in the case of late payments Missing payments could have severe consequences for you (e.g. forced sale) and make obtaining credit more difficult
The repayment of the loan is free of charge in the secondary offices of the Creditor, as well as at the discretion of the Debtor through the representatives authorized to collect loan payments. The list of which and their fees are published on the website of the Creditor (www.microinvest.md/cum-achiti-creditul/). In case the Debtor use payment methods with fee, the Debtor cover all the costs of repayment of the loan and undertake to make the payments in such a way that the Creditor receives the agreed repayment amount and without any deductions by third parties processing the refund payment.
In accordance with and arising from the provisions of art. 15, para. 7), lit. a) from Law no. 202/2013, any payments related to the granted credit (commissions, taxes, penalties, late interest and any other type of payment), except interest, will be applied and collected within the limit of the ceiling of 0.04% of the total value of the credit per credit day multiplied by the number of days of actual use of the credit (hereinafter 'Ceiling'). Therefore, the Lender will be entitled to apply and collect the costs, excluding interest, exactly in the fixed or percentage amount established in the contract if the said ceiling allows, and if the ceiling is lower than the value of at least one cost, excluding interest, then the Lender will be entitled to reduce the fixed/percentage amount and apply and collect any of the applicable costs only within the limit of the ceiling value. When calculating the ceiling, the costs already applied and collected will be taken into account, with the exception of interest, which reduces its value. (Representative example: if the amount of the penalty is 20 MDL per day, and the ceiling value at that time is 16 MDL, then a maximum of 16 MDL will be collected).

4. Other important legal aspects
Right of withdrawal You have the right to withdraw from the credit agreement within a period of 14 calendar days	Yes
Early repayment You have the right to repay the credit early at any time in full or partially	Yes
The creditor is entitled to compensation in the case of early repayment The Debtor may repay the loan in full or in part in advance, notifying the Creditor in writing 3 days in advance, and paying an early repayment fee of:	% from early repaid amount, if the period of time between the date of early repayment and convened maturity exceeds one year; % from early repaid amount.The early repayment can be made only if the Debtor has no outstanding debts on interest or other amounts to be paid in accordance with the Contract. % from early repaid amount, if the period of time between the date of early repayment and convened maturity does not exceed one year.
Database usage The creditor must inform you immediately and without charge of the result of a consultation of a database, if a credit application is rejected on the basis of such a consultation. This does not apply if the provision of such information is prohibited by law or is contrary to objectives of public policy or public security The parties may agree on additional terms and conditions, which will be included in the credit agreement.	Yes
Right to a draft credit agreement You have the right, upon request, to obtain a copy of the draft credit agreement free of charge. This provision does not apply if the creditor, at the time of the request, is unwilling to proceed to the conclusion of the credit agreement with you	Yes
The period of time during which the creditor is bound by the pre-contractual obligations	This offer is valid for 15 calendar days after it is issued.
In this regard, I subsequently declare that: I was provided with the necessary information, the essential characteristics of the above-mentioned credit product were explained (interest rate, number of commissions, credit costs, early repayment conditions, total amount to be paid), as well as the consequences of non-compliance with contractual clauses; the costs included in the total cost of the loan were explained to me, including the costs for ancillary services related to the credit agreement; I was offered the possibility to negotiate individually the contractual clauses in the credit agreement that I intend to sign, I negotiated individually the granting commission, the monthly commission, the amount of penalties and I mention that its clauses do not disadvantage me, being fair in the report mine with the creditor; I was asked by the creditor about the probable importance of the information provided and whether essential circumstances that I expected to be provided were not omitted in order to make an informed and rational decision about concluding the potential credit agreement. the information provided and the corresponding explanations allowed me to assess, including the personal analysis of other offers of third party creditors, whether the proposed credit agreement is tailored to my needs and financial situation; I know the content of the contract and all its conditions have been explained to me, I have understood and accepted them, and the documents and information underlying the conclusion of the contract are complete and accurate; I know the law, the normative acts that will govern the contract, as well as the lack of consumer quality; I have no ambiguities or misunderstandings regarding the terms of the contract; the credit product corresponds to the purpose described above and will be used according to the destination and the economic activity carried out. The assets procured/resulted/constructed/repaired from received loan sources will be registered/transmitted in the social capital of the company where my business activity is carried out and/or will be used jointly by the members or individually however strictly for running my business activity. (Signature)