What does Bank Credit Mean?

In order to know the meaning of the term bank credit, it is necessary, first of all, to discover the etymological origin of the two words that give it shape:

-Credit comes from Latin, exactly from the verb “credere”. This, in turn, derives from a Latin expression “certum dare” and comes to mean “give what is certain”.

-Banking, on the other hand, is the result of the sum of two clearly defined components: the Germanic “bank”, which is synonymous with “financial entity”, and the suffix “-ary”, which is used to indicate “belonging” or “relationship”.

Credit is the money that an individual or an institution lends to someone, setting certain conditions for its return (interest, terms, etc.). Banking, on the other hand, is that linked to a bank : an entity that provides financial services.

  • Abbreviationfinder: Find definitions of English word – Network and its abbreviations II.

A bank loan, therefore, is one offered by a bank to its customers. In this case, the bank becomes a creditor by delivering a certain amount to the client, who becomes a debtor. The repayment of the loan must be made according to the agreed requirements; otherwise, different types of punishments can be applied.

Suppose a man goes to a bank to apply for a loan. The entity grants him a bank loan of 10,000 pesos with 15% interest, which he must repay within twelve months. It also charges you 5% for administrative expenses and forces you to take out insurance equivalent to 1% of the credit. This means that, once he has repaid this bank credit, the person will have disbursed 12,100 pesos. In other words: the bank credit will cost him 2,100 pesos (the difference between what he received and what he returned).

In order to get a bank to grant a loan, it will be necessary for the applicant, among other things, to be able to demonstrate their solvency. Likewise, you can choose to proceed to present a guarantee, which will be the security that the entity will have to know that it will be able to recover the money it lends in the event that it does not pay the established installments.

In the event that the person who has requested a bank loan does not pay their installments, the following will happen:

-If you have not paid a fee within the established term, what will happen is that you will be charged, in addition, what is late payment interest.

-If there are two installments that have not been paid, the bank will establish that person or company on its list of defaulters.

-In the event that there are three or more credit installments that have not been paid, the bank will proceed to initiate a claim through judicial channels to recover the money that has not been paid.

There are different types of bank loans. Personal loans are those that are delivered to people, who can request them for different purposes (take a trip, remodel the house or organize a wedding, for example). Trade credits, on the other hand, are granted to companies. Mortgage loans, on the other hand, are aimed at the acquisition of land or a house, using the property purchased as collateral.