improve his own well-being: being fully aware of the product he’s bought and having clear advice will give him more peace of mind and confidence.Once an application has been submitted, the financial institution or online provider will review it and make a decision.You can learn more about how to avoid over-indebtedness in this article (in Spanish) in Tu Futuro Próximo, the blog of Santander Consumer España. avoid over-indebtedness: He will clearly understand how much money he can draw and for how much in interest.strengthen his finances: In other words, he will be better able to cope with situations that may directly damage his assets.make a rational decision: He can carefully analyse and choose the best option for what he needs.Therefore, if he has a full understanding of the line of credit and his obligations, due to the bank’s ethical advice about products, Erik will be able to: Also, we must accept his payment obligations according to the line of credit’s terms and conditions. As the borrower, he will have to act ethically and provide true, up-to-date information. Remember Erik, who was at his bank to see about a responsible line of credit, getting clear information from a manager? Let's say he ends up taking it out. Responsible financing involves ethical rules for resolving complaints and claims. In other words, details cannot be left out or given as hard-to-understand “fine print”. provide clear information and constant assistance: communication needs to be clear and straightforward, especially regarding default.evaluate customers’ collateral: bank managers must impartially and honestly assess customers’ personal circumstances and financial health, including their solvency.To prevent over-indebtedness, they will tell customers about any conditions that do not fit their finances. advise customers based on their needs: Banks must sell their products fairly and should only recommend products that meet customers’ objectives and preferences.examine an applicant’s finances: The bank will gather useful information from the customer and can use legal external sources after having notified the customer.create products that fit the common interest: Products must adapt to their specific users’ needs and set prices appropriately.It set banks on a path to create fairer products, like responsible lines of credit. The United Nations’ Principles for Responsible Banking, which 130 banks (including Banco Santander) signed in September 2019, marked a milestone for society and the planet. What do responsible lines of credit mean for banks? If you want to learn more differences between lines of credit and loans, read this article (in Spanish) by Finanzas para Mortales (Finance for Mortals). Plus, when the borrower pays back the loan, the transaction is complete lines of credit, however, tend to be renewed annually. Loans have lower interest rates and higher repayment terms than lines of credit. With loans, a bank grants a borrower a set amount, which must be fully repaid in regular instalments over a set period. They must pay back the amount they draw with interest in instalments before they can withdraw more funds from the line of credit, which cannot exceed its limit. Though both are managed ethically and professionally by banks, a line of credit is a banking product consisting of a set amount of money that borrowers draw down when they need. It’s important to know the difference between a responsible line of credit and a responsible loan. Banks promise to provide consumers with clear, straightforward details about these products. It helps the bank anticipate a default that may harm the borrower's financial health, the bank and society.
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