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Debt collection: Is it possible for the relationship to remain?

Debts are annoying, frustrating, and hurling. No matter which side we stand on. On the basis of my observations, we can say with great certainty that the entrepreneur of today’s age faces at least one time in the course of his operation that one of his customers, clients and partners does not settle the invoice within the given deadline.

The question is, what can we do to recover our receivables, but the relationship is not irreversible.

Effective recovery starts already when there is no debt

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Did you know that the effective recovery of your debts often starts before the actual debts? Does it seem incredible? But this is true. No matter what kind of ammunition we have, we can work. The fewer the well-thought-out and legitimate tools in our hands, the greater the likelihood that the expected result will be missed, the relationship will be irreparably damaged. It certainly wasn’t the purpose of doing business with his client. Think about how much you have worked to build a relationship to get your customer. It would be a pity to lose it just because at the beginning you didn’t think anyone could get into a difficult situation. I am not saying to assume that you will not want to pay later. It’s not about that, because if you feel that way, you shouldn’t go into the business and save yourself from disappointments.

A word, like a hundred, is a precursor to recovering debts.

What preventive steps will help you recover later?

The first and most important thing is to have an appropriate contract between the parties. Because a contract can be created not only in writing, but also orally, so there is always a contract between the parties. The only question is how easy it can be proved later, and how clear it is to determine who, why, when and how much to pay. Because debt collection is harder to recover, the fewer clearer conditions that both sides have previously agreed. It is not at all irrelevant whether we can refer to a written contract or an oral agreement stamped with handshake.

Before you think that a client candidate runs away, if you put a contract in front of your nose, you should consider the situation. The contract must serve and protect the interests of both parties. In this way, it is possible to avoid later surprises, the “I do not understand” objections that not only make recovery difficult, but also damage the relationship.

If there is no other, at least have a written order and one answer.

Although this does not cover all the details, it is definitely better than an oral agreement.

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In the contract, we can also lay down safeguards that can not only help recovery, but may also precede the debt. A client with a liquidity problem will consider how much it will hurt him if he doesn’t pay. For example, a properly defined default interest is not a negligible aspect. There are other options available that can be taken into account in an appropriate contract preparation process.

If we want to keep our customer relationships, then human communication must always be at the forefront. That is, it is not advisable to strike the hardest tools of the law in the first 1-day delay, although this is not the case. Rather, it is the opposite of what is often observed. It is neither good nor even detrimental to the chances of recovery if you do not take appropriate legal action for too long. But what can we do if we do not want to be too hard, but is efficiency important?

It is not worth to wait without a word. If the customer just forgot about the payment deadline, be sure not to take the wrong name, if we kindly remind you, we ask if the invoice was successful. However, if the payment is not received because the customer is in “financial trouble”, the better you see it as soon as possible. In such a case, many people do not choose what they are paying for and what they do not, but on the basis of their feelings. That is, they try to “get away with it” as long as they can, so they pay for those who are not just waiting quietly.

After a while, the phone, the interested e-mail?

It is time to take things a little more seriously. The payment request may follow. This will be sent in writing to provide you with the necessary torque and to provide a good basis for a controversial situation later on. You can also have a polite tone in your payment request, but be factual. We tell you how much the debtor is entitled to by the contract, what the payment deadline was, how long he has been late and what other obligations have arisen for this, ie how much the default interest or the cost to be paid is. Notice that we will send the letter to the correct address. If this is not specified in the contract, the debtor’s domicile, in the case of a private individual, is the permanent address. In the notice, let us also set a deadline for settling the debt, but this should not be too long.

In vain, the debtor still does not pay?

The recovery of legal claims will sooner or later require the use of legal instruments that can help to resolve the situation If we have already tried kindly, with interest, we have sent out the factual notice, and yet the amount is not received, it is time to face the issue more seriously. situation. At this point it is advisable to ask for legal assistance and to discuss the possibilities with a lawyer. This may result in non-litigation or court proceedings for issuing a payment order.

Legal options alone do not guarantee full success in every case, because if a debtor does not have the money, he does not have to recover from it. However, it does not matter how long we wait when we enter the line of creditors.

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Lender

Why a credit redemption is more advantageous the first years?

How is the repayment of interest distributed throughout the loan?

How is the repayment of interest distributed throughout the loan?

The vast majority of mortgages are amortizable. The peculiarity of this type of loan is that the maturities are identical throughout its duration. This distribution of interest has the effect that the monthly payments of the first years only reimburse a small part of the capital in exchange for a large part of interest.

Take the example of a loan of 150,000 euros over 15 years at a rate of 1.5% (excluding insurance) with monthly payments of 931.11 euros. The interest share breaks down as follows:

  • 1 st year: 180 euros/month
  • 6th year (same monthly payment amount): +/- 100 euros

The purpose of a loan buyback is essentially to take advantage of lower interest, it is strongly recommended to use it in the early years of its loan to achieve real savings and buy the mortgage at the best rate.

Credit buyback: savings for sure?

Credit buyback: savings for sure?

To find out if your credit redemption is financially attractive, factors other than borrowing rates should also be considered:

  • Compensation (IRA or PRA) for early repayment. For a home loan the indemnities amount to 3% of the outstanding capital, capped at 6 months of interest. Since the Cogilaw Act, IRAs can also be applied to depreciable consumer loans, beyond a threshold of 10,000 euros of prepayment per 12-month period;
  • Application fee;
  • The cost of raising the potential mortgage related to the old credit and the fees of the one required with the new loan.

How to get a credit redemption easily?

How to get a credit redemption easily?

Many organizations offer credit buy-back offers, each with its own acceptance criteria: maximum debt ratio, amount of household tax income, as well as the balance to be lived after deduction of the new monthly payment, etc. To know which one to choose according to your profile, do not hesitate to consult the opinions of consumers and to make play the competition.

To lower your monthly mortgage payments, also consider the borrower insurance change. The Cogilaw Company allows you to subscribe whatever you want, so play the competition!

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Lender

Installment loan – special form of financing.

A repayment loan is a special form of financing. With this loan, repayment installments of the same amount are paid over the entire term. The loan is well suited for all people who value planning. The term of the loan is much shorter than, for example, an annuity loan.

This creates some benefit for the borrower. In the course of and through the permanent repayment, the interest rate decreases in relation to the annual amount of the repayment amount.

Info:
Such loans are particularly useful for real estate and mortgage lending. Over the entire term, the installment fees are getting smaller. For this reason, pay-off loans are very popular.

Advantages and disadvantages of the payment loan

Advantages and disadvantages of the payment loan

A big advantage is that the interest rates on a repayment loan are often very favorable. Every user can enjoy a constant repayment installment. This makes the monthly budget planning easier and the residual debt is reduced very quickly.

This has the advantage that the interest payments continue to decrease. Especially with a long-term real estate loan, this form of loan has been proven for years. By contrast, the initial burden is somewhat high due to the higher repayment rates.

Note:
As a result, the monthly rate only decreases constantly over a certain period of time. As a result, every user needs to spend a little more money earning their first monthly installments.

Why is the loan so useful for mortgage lending?

Why is the loan so useful for mortgage lending?

For mortgage lending, the advantage lies in the fact that the user pays his bank a monthly repayment installment and the interest due on it. Each repayment rate reduces the residual debt and also reduces interest rates.

As a result, monthly installment mortgage rates are becoming smaller and smaller. For this, higher installments must be accepted at the beginning of the term. As a result, this form of loan is particularly well suited for conversions and additions to own real estate.

Info:
Particularly well-earning people use this loan for mortgage lending. Before signing the credit agreement, a credit calculation should always be carried out. For the determination of the right loan the personal circumstances as well as the financial condition play an important role.

What condition is required for this loan?

What condition is required for this loan?

The applicant must have reached the minimum age of 18 years. In many cases, the minimum age for a repayment loan is even raised by banks or banks to provide a higher level of security.

Minors have little chance of such a loan. The residence of the applicant must be in Germany. It is important that this is the main residence. Many banks also require a bank account in Germany. This account will be used as the reference account to which the loan amount will be transferred.

Note:
The most important requirement for granting the loan is, of course, the creditworthiness. The creditworthiness of the applicant is checked by a credit bureau query. It calculates the relationship between the applicant’s income and expenditure on all accounts.

If the monthly income is higher than the applicant’s expenses, there is a good chance of a pay-off loan. If other loans have to be serviced already, this chance drops a bit. Often a mortgage loan is accepted as an additional security for the loan. For the mortgage, the name of the applicant must also be found in the land register.

Example calculation for a payment loan

Example calculation for a payment loan

If, for example, a customer pays a loan of 20,000 euros, a term of five years or an interest rate of 10%, services amounting to 1,000 euros and 2,000 euros interest are to be paid in the first year.

Info:
Even in the fifth year, the repayment remains at 4,000 euros, but the interest is minimized to 400 euros. For a borrower to more easily decide which form of loan is cheaper, the terms should always be compared exactly. However, it is clear that the loan is much cheaper at the same maturity and interest rate than an annuity loan.

If it is a loan of 1 million euros and the term is two years, the borrower pays at a 3% interest rate loan rates of 30,000 euros and a repayment amount of 500,000 euros in the first year. For the second year, the rate remains at 500,000 euros. Here, however, only interest in the amount of 15,000 euros will be charged.

Note:
The examples show that the accrued installment always consists of the linear repayment installment and the interest calculated from the residual debt. As a result, the repayment share always remains the same.

5 tips for a payment loan

5 tips for a payment loan

1. Compare prices

Before concluding a credit agreement, the prices and terms should be compared exactly. Every loan offers advantages and disadvantages. Special attention should always be paid to the repayment of installments and the amount of interest.

The installments always consist of interest and repayment as well as any fees. The repayment is needed for the repayment of the loan amount.

Info:
The costs and commissions incurred in financing the loan are paid by the fees and interest. With a good credit, the installments should always be calculable and the monthly burden low.

2. Use maturing or maturing loans

In the case of a so-called bullet loan, the interest is always paid by a one-off payment. During the repayment phase, only the interest will be repaid. The redemption portion is saved as part of the repayment vehicle as a life insurance policy.

This is done through funds or a savings plan. If enough money has been saved, it can be used to pay off the loan. A big advantage of this loan is that the contributions can often be saved for tax purposes.

Note:
A minor disadvantage is that the interest burden always remains unchanged during the loan term. This is mainly because it does not minimize the residual debt.

3. Loan with a constant repayment

Loans with a constant repayment offer a constant repayment rate during the repayment phase. This has the advantage that the interest is calculated only for the remaining debt and thus the monthly burden is less and less. The residual debt is reduced and the monthly rate sink.

The repayment share remains the same. Accordingly, at the beginning the monthly burden is very high. In finance, this variant of the repayment next to the real estate financing is the norm. Often, banks and borrowers often resort to annuity loans on real estate.

Info:
For rented buildings, maturity loans are an option. Banks seldom offer such loans in the private sector.

4. Find the right bank

Before concluding the loan, it is important to find the right bank for the loan. If the repayment loans are burdened with an entrepreneurial profit, the borrower is much better off with an annuity loan. In any case, it is important that the loan fits the borrower.

After all, not every borrower is able to pay higher installments in the first year. Especially in the construction phase, many real estate financiers calculate with moderate installments per month. After all, unforeseen expenses can occur time and again, especially during the construction phase.

5. Special repayments should be possible

A special advantage are loans that do not exclude a special payment. If a variable interest rate has been agreed between the bank and the borrower for a loan, special repayments are available at any time.

If a fixed interest rate has been fixed in the contract, it is only possible to make a special payment if they are specified in the contract. Otherwise, there are fees for a special repayment, which make a complete repayment of the loan at once not worthwhile. If a loan agreement is terminated prematurely, the borrower often has to expect a prepayment penalty. The fee amount is determined by law.

Note:
A classic repayment loan can be terminated in the rules after a ten-year term at no additional cost.