Concept, types, features, sources of long-term crediting

The system of long-term crediting includes many different attractive offers and opportunities. It is possible to use borrowed funds with big return, expediently and correctly, but actually a lot of things are defined by terms. It is extremely difficult to realize the most interesting, profitable and very perspective projects quickly and productively. Because of this reason the long-term credits are necessary for society and service. It is important to note that the bank organizations at increase in periods of validity of the credit agreement are much stronger subject to various risks.

Long-term crediting costs on a high step in the countries economically stable and rich where key rules and laws on the organization and business and its finances are strongly established by the legislation. Such offers of banks are one of the best instruments of active expansion of activity and development of economy in general. In Russia only stable and reliable financial institutions have such products in an asset, but also it is already huge positive. Long-term crediting it is a form of granting the credit which is defined by a loan repayment period. According to the Instruction of the Central Bank of Russian Federation No. 17 in Russia the loans which are granted for the term of more than three years belong to long-term. Banks give long-term credits to natural and juristic persons.

Subjects of long-term crediting: capital expenditure for construction, reconstruction, modernization of objects of production, public and household value, acquisition of the equipment, equipment, vehicles, buildings, constructions, constructions, and also costs of financing to the population on long various benefits of the lake. The bank doesn't credit not profitable, unprofitable projects, doesn't issue the loan to persons with quite doubtful credit history. Long-term loans have for bank more risk character in comparison with short-term. The bank goes on them in the course of development of credit policy, proceeding from personal reasons.

Issue of long-term loans can be made at a time or step by step in process of performance of installation and construction works (in case of investment longterm crediting). Concrete terms and the period during which repayment of longterm loans will be carried out depend on the following factors:

• -    cost recovery ratios;

• -    solvency, financial state and another indicators of the borrower ;

• -    risks and threats on the credits;

• -    need of acceleration of turnover of credit resources;

Long-term crediting is based on this basic principles:

• 1)    Onerousness;

• 2)    urgency and recoverability of means;

• 3)    differentiation;

• 4)    security.

Nowadays there are many types of the long-term crediting:

• -    Investment (for business);

• -    a consumer loan (it is focused on satisfaction of consumer needs, is given for any purposes);

• -    mortgage are credits on repair, construction, renovation, acquisition, reconstruction of real estate objects (the land plots, houses, apartments other constructions of consumer character);

• -    for the Young family are loans on construction, acquisition of real estate objects for the citizens of Russia who reached majority, married and to one of spouses is less than 30 years, to incomplete families with children where one of parents didn't reach 30 years.

• -    the long-term credit to citizens who have subsidiary farm;

• -    car loan. Сommercial car loans, has special purpose is given for acquisition of the vehicle (the car, the motorcycle, the trailer, a motor scooter, the boat, etc.);

• -    the pension loan –This type of credit for the citizens of the Russian Federation who reached a retirement age;

• -    the educational credit —for payment to secondary professional or higher education.

Long-term credits can be also classified by the following signs:

• 1)    on sources of crediting: credits are issued with own resources and credits are issued with the proceeds;

• 2)    on terms: from one year to 5 years and above;

• 3)    on character of investing: direct investment and indirect investment;

• 4)    on risk degree: with high, average and low degree of risk;

• 5)    depending on borrower’s branch: heavy industry, chemical industry etc;

• 6)    depending on its territorial affiliation: Moscow region, North Caucasus region, etc.

The main advantage and the main distinctive feature of long-term crediting is a credit term of payments. At the expense of the long temporary period for which it is necessary to repay completely the loan it is possible to make small monthly payment or to take the credit for a large sum. An opportunity to solve important problems, for example, to get the real estate, - important advantage of this type of crediting. It is possible to take the huge sum of money and buy the apartment, pay expensive, buy the car etc. As sources of financing of the long-term credits distinguish: authorized capital, funds of bank and retained earnings; long-term loans; deposits for the term of higher than one year.