The term ” credit ” is not a Latvian word but is often used in conversational language. In everyday life, we use it as a synonym for a loan and everyone knows what that means. In Latin, where the “credit” came from, it meant faith or trust (“creditum”, “credere”). Linguists could say that by using a compound combination of trust credit, we actually say trust trust, but such discussions to remain philologists. Nowadays, lending has become the cornerstone of the global economy and is used by individuals, companies, countries and supranational organizations.
According to the Latvian dictionary, the credit is the issuance of funds, goods or services for debt or payment, as well as money or goods provided in this way.
Within the framework of the transaction, both parties involved – the lender (the creditor) and the borrower (the debtor) agree in writing or in writing on its course and conditions. Legally, both forms are equally strong, but in practice, written contracts are usually used. They are more reliable and allow you to discuss in detail all possible situations that may arise between the two parties to the transaction. When concluding a contract, the borrower has to pay a commission for the attraction of financial resources, which is fixed or fixed as a percentage of the loan amount.
Mortgage Loan -Fast Credit
The principal interest of the creditor in lending money is the profit generated by interest payments. The amount of interest payments depends on the level of confidence, maturity, transaction amount and potential risk. Formally, the deal is beneficial to both parties, because the debtor needs funding to achieve the intended goals, but the creditor wants to earn. In real life, the borrower is at least initially in the role of the applicant and the lender’s acceptance depends on market competition and personal calculations. Depending on the purpose of the use of the service, several types of loans are possible – short-term loan ( fast credit ), credit line ( credit limit ), loan for consumption ( consumer credit ), loan for car purchase ( car loan ) or home loan loan (mortgage loan), business start-up loan or expansion etc.
In situations where the debtor is unable to pay under the terms of the contract, the creditor is entitled to pursue the recovery of the debt by judicial process. In some cases, when a loan against collateral is used, the pledge may be disposed of immediately. Legislation provides that debt recovery can only be directed against a borrower who protects his family members. Sometimes debt collection is also reported against the spouse’s property, which is the main reason for entering into marriage contracts in Western Europe. From the debtor’s point of view, forced repayment is the worst path, but it is the main guarantee in the lending process. Without this guarantee money would be borrowed in a small amount, for a short amount and only if there was 100% confidence in the credibility of the debtor. In Latvia this would mean that the money is lent
Lending money to a creditor is a way to increase the amount of your capital by receiving interest payments. For small amounts, this is not important, but lenders can only live on interest only when the money reaches a certain level. As a result, the rich in the world is getting richer, but the poor are getting poorer. In countries that care for their citizens, a system should be developed within which national banks are established. At the moment when the loan is repaid in full, the National Bank could return the interest payments made to the debtor. This would ensure that less wealthy segments of society have the opportunity to accumulate capital and are not concentrated within a narrow group.