The loan is an obligation between two parties (lender & borrower) the borrower lend from the lender an amount or assets .
The loan is achieved when the lender accepts on lending the borrower an amount of money. And the loan is usually granted with the expectation of payment of the original amount of money plus in most cases the so-called interest rate.
Loan settlement: before contracting about the loan, the lender and the borrower must agree on the way to settle the loan, either on monthly repayments or as one shot repayment at the end of the loan agreement
The borrower has the right to settle his loan for the bank either the whole loan or partly before the maturity date for the loan according to the facility agreement between the two parties and the early settlement fees must be defined in the agreement. Your commitment in paying your loan qualifies you to get other loans, and your failure to comply in paying your repayments affects badly on your ability in having other loans in the future from the lending companies and banks..
This type of interests is fixed and to be added on the principle of the loan the calculation for the fixed interest rate is:
Example: a loan amount is (1000), and the interest rate is 9%, and the number of years is 2y
The solution: 1000 x (9% x 2) =180.And it is the interest amount for the whole loan. And in this case it should be added to the loan amount to become (1180)
This type of interests is the highest type of interests to calculate; because it is maximizing according to the number of the years. And the accumulated interest is added to the loan amount.
This type of interests minimizes each time the loan is paid, and this type is considered as the least from other types of interests.
The second year: (1000-500) x 9% x (12/12) = 45 added on the loan. We notice that the grand total in this type (90+45) =135 less than the others. There are the types of the known loan interests, and we noticed that the least type is the reducing interest and the most one is the accumulated interest.
Which is the standard used to determine short-term interest rates overnight interbank rate as interest rate lending banks to each other for one day and is determined by the Central Bank of Jordan so that the rate of lending interest rate is adopted and monthly.
The Bank shall adopt the Interbank + margin specified in the facility contract when determining the interest rate for the customer. The frequent of changing Period shall be determined every 3, 6 or 12 months ( as in the loan contract )
Therefore, when the interbank price increases, the repayment period or the amount of the monthly installment will increase or both, according to the facility contract, as well as when the interbank is low.
The borrower must pay his monthly payments on schedule. In case his inability to pay his monthly payment on schedule he will be considered belated on paying his monthly payments, and he could be considered delinquent after not paying three monthly repayments and he was unable to pay any of late payments, and if he stopped paying for continued six months the lender has the right to execute on the collaterals according to legal judgment. And that could affect on his credit scoring so he won’t be able to get more loans in the future or any bank services.
The Central Bank Of Jordan is an organization responsible for the banking system in The Hashemite Kingdome Of Jordan and the main responsibility is issuing the currency, controlling the interest price, the Central Bank Of Jordan is also responsible for the banking system in The Hashemite Kingdome Of Jordan .
The Central Bank Of Jordan has issued lots of procedures to protect the costumer and the most important one, dealing in justice and transparency procedures which determined the maximum fees that should be taken from the borrower and to give him his right to know all the information related to his loan and his repayment schedule and guaranteed his right to be informed if the bank had raised-reduced the interest rate on his loan and how it could reflect on his payment schedule, and they had introduced a unit to receive costumers’ complaints in all the Jordanian banks to receive complaints about their bank accounts.
A credit report is a report that contains detailed information about an individual and / or company that has financing and / or credit facilities from credit providers, including personal information (eg name, address, job) and a summary of financial movements for loans and / or borrowings Obtained from one or more credit providers (such as credit numbers / types and credit facilities, financial performance of payments, number of payments to be paid, any negative credit performance events).