Default – If the borrower is late due to default, the interest rate is applied in accordance with the loan agreement set by the lender until the loan is fully repayable. A Parent Plus loan, also known as “Direct PLUS,” is a federal student loan that is received by the parents of a child who needs financial assistance for the school. The parent must have a healthy credit rating to obtain this loan. It offers a fixed interest rate and flexible loan terms, but this type of loan has a higher interest rate than a direct loan. As a general rule, parents would only benefit from this loan in order to minimize the amount of student debt for their child. A loan is not legally binding without the signatures of the borrower and lender. For additional protection for both parties, it is strongly recommended that two witnesses be signed and that they be present at the time of signing. Renewal contract (loan) – extends the maturity date of the loan. After approval of the agreement, the lender must pay the funds to the borrower.
The borrower will be tried in accordance with the agreement signed with all sanctions or judgments against them if the funds are not fully repaid. Depending on the amount of money borrowed, the lender may decide to have the agreement approved in the presence of a notary. This is recommended if the total amount, the capital plus interest, is more than the maximum acceptable rate for the small claims court in the jurisdiction of the parties (usually 5,000 usd or 10,000 USD). Simply put, consolidating is taking out a considerable credit to repay many other credits with only one payment to make each month. It`s a good idea if you can find a low interest rate and you want simplicity in your life. Borrower – The person or company that receives money from the lender, who then has to repay the money according to the terms of the loan agreement. If you decide to borrow online, be sure to do so with a well-known bank, as you can often find competitive low interest rates. The application process will take longer because more information, such as your work and income information, will be needed. Banks may even want to see your tax returns. Not all loans are structured in the same way, some lenders prefer payments every week, every month or another type of preferred calendar.
Most loans typically use the monthly payment plan, which is why, in this example, the borrower will be required to pay the lender on the first of each month, while the total amount will be paid until January 1, 2019, giving the borrower 2 years to repay the loan.