Loans and Donations between Individuals

Nowadays, banks, savings banks, financial entities and all companies or individuals that lend money have a selection process to determine who they lend capital to.

Even the companies of online loans , loans without payroll or fast credits through Internet, can seem that they did not put great obstacles to grant the money, but when it comes to considerable sums they take a little more time to study the case and dismiss it , If necessary.

That is, access to money loans of considerable amounts is not for everyone.

Fortunately many parents and grandparents are there to give the push that many need to buy a house, a car or get out of debt. But that money that parents or grandparents can ‘loan’ does not escape the eyes of the Treasury.

Loans between individuals are growing in recent years, so it is normal that the state wants to regulate them.

There is no official statistics on this type of transactions, but the money leaves a trace and there are many who take advantage of family ties to commit fraud.

Whether you are lending money or receiving it from a relative, you have to know that the Treasury could confuse your loan with a covert donation, and force you to pay the Transfer Tax and the Documented Legal Acts that can amount to large percentages of the total, depending on the Autonomous Community where the parties reside. On the contrary, money loans are exempt from tax.
To avoid such confusion to the administrative body that watches our pockets and you a dislike, it is advisable then that the loan be made with all the requirements required by the laws in force.

A loan contract must be entered into between the parties that is registered either by public deed or by private contract. In any case, the document must be taken before the Treasury office of the Autonomous Community where the parties reside and the Tax on Patrimonial Transfers and Documented Legal Acts be self-assessed, with a zero cost (€ 0.00) since this operation is considered exempt from pay for it In this way, with a document in date and with seal of the entity to which it concerns, the operation is in law.

In the drafting of the document, the following are compulsory:

  • The parties involved
  • The loan amount
  • Form and time of return
  • The interests, or in this case the gratuity of the same ones

It is important, if you are obliged to file the declaration for Wealth Tax, that this transaction is reflected, as a debt and as a right to credit respectively at the end of each year of the life of the loan.

Many problems can be avoided when documenting a family loan. The borrower can always justify the money that has entered into his account without risk to be confused with a donation or an unjustified increase in his assets. Also, although family ties are very strong and no one believes that a loved one is going to misbehave, this type of loan certified to the administration can be claimed more easily in case of default.

Call-off Loans

In contrast to a traditional loan or loan, which is granted once in the amount of a certain amount, the call-off loan acts as a permanent credit line .

This form of credit is a little more complex, usually offered with slightly higher interest rates, and is nevertheless a very interesting alternative to other forms of loans and advances, as it focuses on the flexibility of customers in financial matters. How exactly does this story work with the call-off loan? Here you will learn more about the function, the advantages and disadvantages .

What is a call credit?

The easiest way to compare an on-call loan with a credit line . At the beginning there is a sum, which is granted by the bank for its own current account . The customer has the option of always putting this sum to the end and, logically, has to compensate it again in part until it can be used again. Now enjoys the Dispo with its high interest rates not very popular among customers and is therefore inferior to a call credit. This is usually granted when it is not clear what the actual loan amount is. Not infrequently, it is also given as a supplement when a borrower decides, for example, for a real estate financing and requires a little extra margin for the running costs.

Credit line

The call-off loan is set up by the bank as a classic credit line . It is agreed in the loan application so that a certain amount is made available to the customer at any time can dispose. The loan runs thereby independently of the account and should not be regarded as a Dispo, since it must be paid also separately. At the present time, for example, it is normal for a repayment of approximately 5 percent of the loan amount to be agreed each month.

Example

If, for example, the person has a credit limit of 3000 euros and irritates them directly, he would pay 150 euros each month in repayments. In addition, of course, the interest, which has also been agreed with the application together. The key difference to a normal loan is that it can use the money paid back anytime and the eradication continues. Therefore, there is no classic term , as it is for example in a normal loan.

Advantages disadvantages

Here you can find out more about the advantages and disadvantages of the call-off loan or call-off loan.

Advantages

  • The on-demand loan offers the advantage of providing the borrowers with the full flexibility they may desire from such a loan.
  • Because they have access to them at all times, they can use it for a variety of purposes and access the capital over and over again.
  • The automatic repayment allows the loan to be paid off unaffected for a few months and then automatically available again when the money is needed.

Disadvantage

  • Disadvantages can be found in the fact that these loans usually have higher interest rates than other types of loans.
  • In addition, it is possible that the automatic repayment becomes a burden on the account. But since this is actually the case with every repayment for a loan, that should not play too great a role.

Call-off loan makes sense

The on- demand loan can certainly be seen as a very good way to get more flexibility in your own finances. However, it is especially important for this loan that one agrees on a realistic sum in the eradication and also compares before the providers to obtain the best possible conditions.

Fixed or variable interest rate on loan? What are the pros and cons?

Applying for a loan is always a bit exciting.

It also requires some work to prepare you well . If you go to a bank, you should ask for both interest rates . This way you can compare them and determine which ones you will take. This can have a big impact on the interest you will eventually have to pay.

Option 1: fixed interest rate

A fixed interest rate means that you pay the same interest during the total repayment period . When you take out your loan, it is thus determined how much the interest rate will be.

Benefits

  • You know perfectly well at the start of your loan how much you will have to pay monthly.
  • With a low interest rate, you are sure that you will always continue to pay off this low interest rate.
  • You can have a loan with a fixed interest rate revised, the interest rate had to be very low compared to your interest rate.

Cons

  • If the interest rate drops after closing your loan, this does not affect your payments.
  • When reviewing your fixed interest rate, you have to pay a reinvestment fee on that part that you still have to pay.

Option 2: variable interest rate

With a variable interest rate you do not know this in advance and it will vary and how much . This can be either positive or negative.

Benefits

  • If the interest rate drops, you will also have to pay less. With a high interest rate you obviously have a chance that it will fall.
  • The maximum fluctuations of the interest rate are legally fixed. For example, the interest rate can double as much as it is higher. And he can drop to 0%.
  • You can also get an extra limitation on the swing at certain banks. In this case one speaks of a ‘cap’ or upper limit of the fluctuation. For example, your upper limit may be +2, which means that your interest rate can never rise more than 2%.
  • In addition, you can also limit your risk by, for example, adjusting the interest rate annually, but changing it every 3, 5 or 10 years. Each bank has different options in this respect, so be sure to ask for it .

Cons

  • You never know when you sign your loan how much you will have to pay in total.

Option 3: accordion loan

This type of loan combines the best aspects of both fixed and variable interest rates . So you know perfectly how much you will have to pay monthly. If the interest rate fluctuates, your repayment period will simply be shorter or longer.

So if you want to take out a mortgage loan then certainly weigh the pros and cons. And let different simulations make. Make an appointment with a bank in your neighborhood and calculate your loan in advance .