What is a bank credit

Bank credit is a credit instrument that banking institutions can offer to their customers. The opening of credit is a contract whereby the bank undertakes to keep a sum of money available to the other party for a given period of time or indefinitely. Furthermore, it is also possible to sign this contract against collateral (real or personal).

This type of financing is extremely useful both for families and for companies. To allow them to have an overdraft or available money, the bank credit becomes a precious ally. If the customer runs out of liquidity available in his current account , he is sure that he can count on a certain amount agreed with the bank.

How does it work

Through the bank credit it is possible to withdraw money from your account even if the balance is negative, within the limits of the sum agreed with your bank. The applicant is required to repay the amount paid as soon as he has an economic return. Obviously, in addition to the amount, the credit institution also defines the repayment plan of the installments and the timing referred to the balance of the debt.

How to request it

The application can be filed at the branch by filling out a specific form. The evaluation criteria can be considered similar to those of traditional loans: the bank checks whether the applicant meets the economic requirements as regards revenue and the monthly balance sheet. In particular, it is good practice to make sure of any pending payment pending, to avoid slippage in the procedure.

Delivery times

The application of the bank credit is a procedure that involves short times, provided that the requirements defined by the bank are respected. The credit institution, in fact, must first carry out all the necessary checks, to assess whether the person will be able, from time to time, to return the amount of money he has asked for. In general, the outcome of the granting of a credit line can range from a few days to a month at most (usually, if the month from the application is exceeded, the credit line can be considered not granted).

return

Once the agreed period of time has passed, the credit institution will proceed with the request for the return of the requested bank credit. It is good to always keep in mind a very important detail: the longer the time required for the return, the higher the interest rates applied.

Two clarifications

• The main advantage of a bank credit lies in the possibility of having coverage to make expenses, even urgent ones, despite a passive account.

• Since the interest rate is variable, before applying for a bank credit it is advisable to define an expense plan. To avoid the risk of a negative balance, it is useful to distinguish between constant amount payments (such as loan installments) and variable amount payments (such as bills, taxes).
  

An example

Consider that a person earns 1500 euros per month. In that same month, there were extra expenses, assuming for an amount of five hundred euros more than the earnings. The person in question, if he has activated a credit line, can withdraw money even if, in doing so, the account goes in red.

This sum of money will then be withdrawn directly from the salary of the following month, with the application of the relative interest rates. It is important to specify that this is only one of the possible examples: the methods of requesting money, the interest rate and the time for the return may vary according to the specific agreements that the person makes with the credit institution that grants him the credit line .