Month: January 2020
Shareholders without direct influence on the business are not deductible loans
The term deduction loan indicates that the corresponding loan amount must be deducted from the bank’s equity. As a result of this provision, the financial institution can grant a lower loan amount, since the amount of equity is a very important parameter for the amount of the maximum loan to be granted. In addition, each withdrawal credit must be reported to the Federal Financial Supervisory Authority. In addition to the name of the recipient of the corresponding loan, the corresponding notification must also include all conditions and information about the collateral taken into account. The legal provisions stipulate that a loan is to be treated as a deduction loan whenever there is a close economic link between the borrower and the lender. This is basically required for a loan to shareholders, which can be both natural and legal persons.
If this principle is interpreted literally, any loan that a Cream Bank bank pays to a member would be regarded as a deduction loan. The same situation would apply if a small shareholder received a loan from the bank of which he had shares. In practice, a single member has very little influence on the economic decisions of his bank, and a small shareholder can only exert a small influence on them. For this reason, loans to bank members or shareholders without direct influence on the business are not deductible loans, but can be granted as normal loans. This also applies if the bank grants a member bonus or shareholder bonus on the loan terms.
Deduction loan exists if the loan is granted to a shareholder
A deduction loan exists if the loan is granted to a shareholder who, due to his shareholding, can actually influence the bank’s economic decisions, which must be checked in individual cases, since no exact participation rate is given, from which it can be assumed. In the case of loans to employees of a bank, comparable criteria apply for deciding whether this is a deduction loan. The employee loan to the cashier or bank advisor with very little decision-making authority does not have to be reported and does not have to be taken into account when calculating the bank’s equity, while the loan to the director or an authorized officer of the bank is usually classified as a call credit got to.
Loans to subsidiaries or sister companies must also be classified as deduction loans. It depends on the actual economic connection. If a car bank is actually wholly or predominantly owned by the manufacturer, a loan to the manufacturer is a deduction loan; however, if the bank only bears the name of the motor vehicle manufacturer and has actually been sold to a banking group independent of it, auto bank loans to the manufacturer are normal commercial loans and do not have to be reported as deduction credits.
Credit repurchase has become so common that we mistakenly believe it is automatic. Like any loan, the redemption is subject to drastic conditions. The operation comes under the sovereign appreciation of each organization you approach. So how do you get your file through and avoid refusals?
The criteria for accepting your file
Each application is examined with a magnifying glass. To qualify for a loan buy-back, it is crucial to avoid over-indebtedness. Indeed, banks are prohibited from supporting a person in a state of over-indebtedness. Remember that the legal threshold is set at 33% of your income. If your debts exceed a third of your income, you can be considered as over-indebted and any request for credit can be refused.
The second criterion is that you are not filed with regulatory authorities. The filing makes you prohibited banking and therefore prohibited credit. Obviously, there are ways to be able to benefit from a credit or a redemption if you are stuck, but the chances are very low.
Among other things, filing requires the regularization of your financial situation. This means that you have to settle all the delays recorded. However, you should know that the filing does not disappear upon regularization. It takes approximately twelve months for your name to be removed from the prohibited banking list. In the meantime, your credit or redemption requests are unlikely to be successful.
The intermediary in banking operations, the solution to a refusal
Although you meet all the criteria to be able to benefit from a credit repurchase or consolidation, the bank retains the right to refuse it to you without reason. The intermediary in banking operations or IOB can help you to intervene with credit institutions. Thanks to its network and its mandate with credit institutions, IOB can indeed conduct negotiations differently in order to convince organizations to accept your file. It is sort of lobbying to defend and speed up your case.
The IOB takes full charge of your file. It does not only help you build your file since it does it for you. He is also the best qualified to know the workings and the functioning of a credit institution. Thanks to its expertise, your file is always well organized and well defended.
Finally, if your request has been refused, please note that you cannot renew your request with the same establishment after 6 months.
Although there is no law requiring you to purchase insurance, insurance is often one of the requirements imposed by the lender, the credit agency. This is an additional guarantee in case you will no longer be able to honor your monthly payments. However, it is worth paying special attention if you want to save some money. Here are some tips that should help you choose your outstanding balance insurance.
What is balance outstanding insurance?
It is a variation of temporary death insurance which covers the amount of monthly payments remaining to be paid if the borrower ever dies. It is temporary because it only covers the duration of repayment of the loan. If this insurance is mostly taken out for a mortgage loan, other forms of loans can also be guaranteed by the outstanding balance insurance. This insurance mainly protects your loved ones and your families.
Coverage percentage, first criterion
First, your attention should focus on the percentage of insurance coverage. When you borrow for two, especially with your spouse, you have two possible choices. On the one hand, the 100/100 distribution makes it possible to cover the remaining balance due in full if one of the co-borrowers dies. The other borrower will thus be fully discharged.
On the other hand, you can arrange the insurance and share the coverage, in 50/50 or in 75/25. The remaining balance will be paid by the insurance up to the percentage allocated for the deceased borrower. The survivor, meanwhile, will bear the rest.
The premium payment method
You also have several options for premium payment. Payment in one installment consists in paying the premium in full upon signature of the contract. This mode has the advantage of being simpler to manage, without risk of fluctuation. But full payment at once can be substantial.
On the other hand, you can choose to spread the premium payment over the duration of the contract. More reduced monthly premiums, it is nevertheless necessary to be careful because the rate applied can vary in the meantime, resulting in a considerable additional cost of your credit.
The expected tax benefits
Balance insurance owed on the head of a single person always has a more attractive tax advantage. But the two-insured formula is certainly the most economical, although the premiums are not deductible.
Today there are many sites that offer an insurance simulation service. The main interest is to be able to obtain all the useful information to better compare the offers.