Agreement between a borrower and a financial institution to review and adjust the terms of an existing loan. This can include modifying interest rates, extending the payment period, restructuring the amount owed or other changes that make the loan more suitable to the borrower's financial situation. Loan renegotiation can occur for various reasons, such as the borrower's financial difficulties, changes in market interest rates or simply to improve the loan's conditions.
Also known as revolving credit, it is a line of credit granted by financial institutions that allows borrowers to withdraw funds up to a pre-established limit and reuse these funds as they are repaid. Unlike a traditional loan, where the amount is granted only once and repaid over time, revolving credit offers continuous flexibility. Borrowers can repeatedly use and repay the available funds, as is the case with credit cards or personal lines of credit. The main feature of revolving credit is that as the funds are repaid, they become available for use again, without the need to renew the loan. However, borrowers generally pay interest on the outstanding balance and may be subject to fees associated with revolving credit.
The act of paying back an amount borrowed, a debt or a financial obligation to a lender, usually in instalments or according to the terms and conditions set out in the financial agreement. This payment may include the principal amount of the loan, as well as associated interest and charges, and is made over the period of time duly defined in the agreement.
A financial measure that represents the total annual cost of a loan or credit, including all associated charges, fees, insurance and expenses, as well as the capitalisation of interest over the term of the loan. The RAER is expressed as an annual percentage and offers a comprehensive and transparent assessment of the effective cost of credit. The RAER is a refined and more accurate measure of the total cost of credit compared to the nominal interest rate, as it takes into account all the charges associated with the loan, as well as the frequency with which interest is capitalised. This means that the RAER includes not only the effective interest rate, but also all the additional expenses that a borrower may incur over time.