With the country’s current economic situation, we know that it is increasingly difficult to gather the money needed to acquire a high-value asset. So, if you’re thinking about buying a house or a car, for example, you need to know what financing is and how it can help make that dream come true. In this article we will make you able to understand that what does financing mean?
Financing is a type of loan intended for the acquisition of specific goods. Basically, you can contact financial institutions and ask for a certain amount to be able to purchase a desired asset, such as a car or a house.
In this type of contract, the financed asset serves as the guarantee that the loan will be repaid. That is, if the contractor does not pay the installments properly, he may lose possession of the property or vehicle acquired with the help of the bank.
The benefits of financing are numerous . In addition to being one of the safest ways to purchase real estate today, knowing exactly what financing is and how to hire the best one for your objective, you can:
- use your FGTS for entry or payment of installments;
- acquire a good immediately, since you don’t need to collect all the money for the cash payment;
- have an extended payment term, making the value of each installment more accessible;
- advance some installments or settle the remaining amount of the debt and, thus, reduce the interest of the contract.
- Renegotiate the loan with the financial institution if the installments are too heavy.
What types are on the market?
Vehicle financing is an example in which a financial institution grants credit for customers to fulfill their dream of acquiring a car , motorcycle or other types of vehicles.
The value of the credit operation is transferred to the store that sold the vehicle. This causes the good to be paid off with the store and then the loan must be paid to the bank or financial institution by the customer.
Payment is in installments. The installments are composed of the value of the good in installments, interest, tariffs, insurance (if applicable) and taxes such as IOF .
As we said, when it comes to financing, the acquired asset works as a guarantee that the debt will be paid. In the case of vehicles, a car or motorcycle acquired through financing is the guarantee of the loan.
In some financing options, as in the case of Banco PAN , it is possible to finance up to 100% of the vehicle’s value, with up to 60 months to pay and 45 days to pay the 1st installment. In addition, you can count on credit life insurance .
To finance a car or motorcycle with PAN , just follow the steps below:
- Look for a PAN partner or enter the Mobiauto platform ;
- Search for the best financing conditions among the offers;
- Gather the requested documentation, such as RG, CPF, proof of residence and proof of income ;
- After credit analysis and approval, sign the documents that the PAN partner store presents to you, including digitally;
- Pay the installments as per the contract.
2-real estate financing
The mechanism of this type of credit is the same: the money obtained must be used to purchase a property, whether a house or an apartment.
The asset purchased is used as collateral. So, if the financing amount is not paid, the financial institution can use the property to settle the debt. However, this will only happen after many attempts to reach an agreement, as it is in the interest of the financial institution that you settle your debt.
For this type of financing, you can even use your FGTS (Fundo de Garantia do Tempo de Serviço). The money can be used as a down payment or to pay off part of the requested credit, which can facilitate debt repayment.
It is also important to know how the value of the installments is calculated. This is established by amortization, which is how much of the debt has already been paid, and based on interest.
For amortization, there are some systems, the most common of which are:
- Price Table, when the value of the installments is the same until the end of the financing;
- SAC (Constant Amortization System), when the value of the installment decreases over the years;
In the case of vehicle financing, the Price table is common, with fixed installment amounts. In real estate financing, it is quite common to find the SAC system.
The first case is more common in financing with shorter terms.
Student financing or university scholarships occur when a private financial institution bears the expenses of studies, and the student who applies for credit pays later, with interest added. Financing can be partial or full.
With FIES, the lower the family income, the lower the interest rate charged for financing. The student pays off the loan only after graduation, in long-term installments.
Another advantage of the program is that the interest rates are the lowest in the market.
To join the FIES, you must have taken the ENEM (National High School Exam) and have scored at least 450 points in the test. The vacancies offered may vary from year to year. The better the performance in ENEM, the greater the chance of getting funding.
4-Financing for construction or renovation
Financing for construction or renovations is a line of credit offered by financial institutions aimed at those who need to build or renovate a property.
To obtain this credit, it is necessary to obtain approval in the credit analysis carried out by the financial institution, which will define the most appropriate amount and financing conditions for the profile of those who need the money.
In addition, in some cases, the evaluation of engineers or technicians from the financial institution is required to analyze the conditions of the property before approving the financing.
DIFFERENCES BETWEEN LOAN AND FINANCING
Loan and financing are similar concepts, after all they are modalities of obtaining credit to achieve objectives. However, there are important differences that must be considered by those who need extra money.
Even if the two cases involve receiving money with the counterpart of payment of the amount in installments with the addition of interest, loan and financing are not the same thing. The main difference between them is:
- In the case of a loan, the money does not have to be used for a specific purpose, and the credit is released directly to you.
- In financing, the money must be used according to the purpose of such financing, for example, in the case of car financing, the resource can only be used for the purchase of a vehicle. In addition, the financed asset is the guarantee of the financing.
Financing must have a specific purpose, unlike the loan, which can be used not only for the purchase of goods, but also for any other purpose, such as paying off debts .
It is also important to remember that, even though they are different, both loans and financing have customer credit analysis.
In addition, in general, the financing brings reduced interest , after all, the financial institution that assumes the risk of default will receive the financed asset itself. This reduces the chances of loss and, thus, the creditor is able to lower interest rates to free up more resources.
How to hire financing?
Now that you know what financing is, it’s time to learn how to hire yours. First, count on Bestrate! Make a free simulation on our website and, with the help of our team of experts, find the best institution to carry out your contract.
The second step is the credit analysis. It is at this stage that the bank analyzes your profile, monthly income and loan application, in order to be able to offer the most advantageous option of fees, interest and payment terms.
And finally, in the legal analysis, all documents of the asset and the client are examined to ensure the security of the process. In the last step, with the proposal approved by both parties, the contract is signed and the financing agreement is signed .