SURGICAL LOANS! What they are and when to request them
Chirographic loans can become one of the easiest financial transactions to perform . Although we may need very specific requirements, requesting them does not involve too much time or effort, and they are highly recommended for companies or individuals who wish to have a quick and easy type of financing.
However, there are currently some doubts that people have not yet come to understand when it comes to applying for a chirographic loan . That is why in this complete guide we seek to expose all those details that are necessary to understand in order to make the experience with our loans the most optimal.
What are and what are the unsecured loans?
The unsecured loans, which are the same as the unsecured loans , are short or medium term financial transactions where a debtor has the commitment to repay the loan amount, adding the appropriate amount of interest. We will do this through a document called promissory note.
It is one of the most beneficial loans for companies and entrepreneurs, since in the realization of the loan no specific guarantee is exposed apart from the obligation of the promissory note. Even so, we can use them to cover only very urgent needs, such as liquidity in work activities, since it involves a long-term risk.
And what is a promissory note?
A promissory note is a legal declaration that exposes the debtor’s obligations , its name is due to the first lines of the document where it says “I owe and I will pay …”. In this statement the debtor is called a “subscriber”, who is the person who agrees to pay the loan. On the other hand, the “beneficiary party” is the one who makes the loan, which can be a person, entity or company. The exact amount of money to be reimbursed and how long the term will be will also be expressed in the promissory note. If you want to know more about them, you have our guide on what is a promissory note and its differences with loans between individuals in which we give more details about them.
As we mentioned earlier, these loans are usually short to medium term, since the longer the time to pay them, the greater the risk on the part of the beneficiary entities . This is why it is usually more available for companies that target a very productive commercial sector, although in reality anyone can request them.
Characteristics and most important aspects of unsecured loans
This type of credit meets a wide variety of aspects that differentiate it from other types of loans. When requesting them it is very important to take into account what are the most important characteristics that can be adapted to us and according to our debtor profile, since they are usually requested to cover emergency and last minute situations , although we can usually request them without problems through Internet and in very reliable financial institutions.
The most outstanding characteristics of the unsecured loans are the following:
It does not require a guarantee
When requesting an unsecured credit it is not necessary that we have any guarantee, such as a property or a bank account in case of not complying with the promissory note, this can be a benefit for the debtor, although this is also associated with its short-term nature . Even so, at the time of making the obligation document we must present a guarantor .
It is a natural or legal person who will be responsible for the obligation of the promissory note, in case we do not make the payment in due time, this is the true guarantor of the debtor’s obligations.
The term of the debt is personalized
In other types of loans and credits there is usually a debt term established in a generic way. However, when we talk about unsecured loans, they usually design a debt term adjusted to the destination of the loan .
This means that if we use the loan to create a new product in our company, whose manufacturing and marketing process is between 1 to 3 months, the term of our debt can be adjusted to 3 exact months, which is when it is assumed that already We have generated the profits of that new product. That is when we will have to repay the loan .
It is very versatile
But not only can we use this loan to carry out our venture or to expand our market niche, we can also have access to it in case we want to make reforms in our property .
Since improving our work space, store or office as appropriate, can help us increase our popularity among our customers, so it will be easy to respond to the refund within the agreed time frame.
Advantages and disadvantages of unsecured loans
There are many reasons to apply for this loan without having to think about other financing methods that can help us, so it is important to pay attention to those advantages that can make a difference. Although there are also some aspects not so positive that can be a problem at the time of request. Without further ado let’s see what are the advantages of unsecured loans :
- We do not need to present a physical guarantee . Our properties and assets will be safe in case we cannot pay the loan at the end of the agreed term.
- It is excellent for unforeseen liquidity : Sometimes, in our company investment opportunities may arise that are not within the plan planned for the productive year. In order not to lose these growth opportunities, we can apply for a chirographic loan adjusted to our needs.
- It is easier to apply for : Unlike other types of loans, the process carried out by financial entities to approve this type of credit is easier and faster than any other loan directed at companies or individuals .
On the other hand, not all loans are perfect. There are also some disadvantages that can make us doubt when requested, although this will ultimately depend on how we will use them. The most prominent disadvantages are:
- Long-term loans are unlikely : Since they are destined for a short-term financial process and it is very unlikely to extend for more than one year. Financial institutions prefer to discard it since it is a risk not to have a guarantee. Likewise, the probability that the debtors default on the payment is also higher.
- Interest rates are high : This may be its most noticeable disadvantage, since its speed and effectiveness is reflected in high interest rates. Unlike other loans that are backed by collateral, unsecured loans are more risky by the creditor.
- It is difficult to determine the end of the term : The debtor must be able to determine a precise day on which he will pay the loan. This is sometimes very difficult to calculate, so we must have an action plan that clearly shows the time periods established for the use and repayment of the loan.
Requirements to apply for a chirographic loan
Depending on the purpose of the loan, we must have at hand a series of requirements that the financial entity will request. As we have already mentioned above, it is nothing out of the ordinary, although we must pay attention to certain conditions at the time of transfer. The most common requirements to apply for a chirographic loan are the following:
- An investment program Without a doubt, we cannot ignore an investment program or schedule, not only will it be useful to calculate the exact amount that we must pay in the correct term , but it will also be a viable guarantee for the entity that will make the loan to us.
- Financial statements of the guarantor. Like the debtor, the person who will be part of the promissory note as a guarantor must submit a balance sheet and a financial statement to the company that will make the loan to us , since they will be able to confirm that it is a viable payment in the event that We cannot pay at the end of the term.
- Some entities request that the interested parties be affiliated with some of their plans or have already had a financial transaction in the past.
- Likewise, it is important that at the time of requesting the loan we do not have any overdue credit in any other financial institution, although we can request them to pay debts of another type.
- Sometimes it is also necessary to have an age limit, for the majority an age greater than 18 years is required, although there are also some unsecured credits that have a limit age of up to 75 years.
Terms of the chirographic loan and interest rates
We have already mentioned that the term of payment of unsecured loans is usually fully customized according to the purpose for which it will be used and the type of business we carry out. However, certain important aspects must be taken into account when we calculate what the ideal deadline to return it will be .
In this process the cycle of operations of our business activity will be very involved. It is a procedure that starts from the production of a good or service, until it reaches our final customer, which does not necessarily have to be a person, this can also be aimed at companies and other professionals.
In this process we must take into account the time it will take for the shipment or supplies to produce the product, its construction, promotion and transport to the place where it will be sold, once this period of time is completed, we will begin to see the income of the product and it is the moment in which we have to return the loan .
Although it is important to note that not all companies are equal and the periods of time tend to vary greatly from each other. In this sense, companies that have a cycle of operations that are too long are less likely to approve a chirographic loan . All this must be very well specified in the warranty document.
Depending on the case, we can use some short-term and long-term measures according to our business planning. Likewise, the interest rate must also be calculated by the entity, but to have an approximation as an example, we can take into account the following:
- Short term: one to six months. Interest rate: Less than 10%.
- Medium term: from six months to two years. Interest rate: From 10% to 11.50%.
- Long term: from two to three fixed years. Interest rate: 12.50% or higher.
Steps to apply for an unsecured loan
If we have already requested some other type of credit in the past, we will realize that doing so for a chirographic loan is simpler, although it is necessary to review what your basic steps are before hiring a definitive loan. The most beginners can take into account the following procedure:
- Step 1: The first thing we should do is look for a list of options of financial entities to which we can go to request our unsecured loans. We can do this through the Internet or by accessing alternatives that have been proposed to us by someone we have already done this procedure before.
- Step 2: Next , we should investigate as much as possible about the financial institution where we are going to apply for the loan. In this way we can have on hand the requirements that we are going to need and the specific conditions.
- Step 3: We will contact customer service directly from the financial entity. In case you have a digital platform, we will proceed to create a user to be included in your customer database.
- Step 4: We must provide our email address, mobile phone number and any other information requested by us to get in touch with us.
- Step 5: Some digital platforms will request through the form the type of loan we want. This type of process will shorten the approval time.
- Step 6: When the entity contact us and we nviarles all these requirements and documents mentioned above and any other requirements you may need.
- Step 7: The approval deadlines are usually after 24 hours or more. Although this will depend on how they work in the entity, this process is not usually so long.
- Step 8: And voila, we can enjoy our unsecured loan without forgetting our deadline for repayment.
How long does it take to approve a chirographic credit?
At the time we apply for one of these credits, the beneficiary will notify us how long we will have to wait for approval, this is not usually a long time. In a period of 72 hours we will surely have an answer, although everything will depend on the amount of money we request with the loan and other factors that influence.
The unsecured credit will be available in our bank account according to the speed of the procedure and the capacity of our bank resources.
What are unsecured creditors?
The creditor is that person we had already mentioned above. He is in charge of lending the money, it can be a company or an individual. At the time of making the loan, the loan will not have any real guarantee of payment, since as debtors we must only guarantee to return the assets once the term has expired .
However, the creditors have no guarantee of how they will receive the payment, since it can be the same way in which they made the loan, in credit, cash or even in real estate.
By not having any collateral, the creditor may have certain rights over some of our assets, that is, he can seize our assets (or those of the guarantee) to overlap the money plus interest.
You can also claim any form of payment except those inalienable goods , which are those that we can not sell or legally transfer as, for example, a property that has been donated to us or we have acquired it by probate of a relative.
The unsecured creditor is entitled to access all these assets in order to add up the total amount borrowed.
What happens if we have several creditors?
If, as debtors, we have requested an unsecured loan from several creditors, we must follow several legal guidelines to determine how the distribution of the assets will be. According to the law, all creditors have access to the assets interchangeably until the debtor is fully paid .
There are also occasions when the estate cannot cover the debt of all creditors. In case it is not enough, the equity will be shared equally among all creditors, although this can cause some problems, for example, in case some creditors require larger proportions backed by the law.
Finally, when making a chirographic loan we have many possibilities to obtain more than one legal obligation. Both parties can do what is called novation of unsecured loan , consists in the extinction or modification of the loan in case there is a subsequent obligation. That is, if as debtors we want to renew or request a new loan, we can request a novation.
But before doing so, we need to follow some requirements. It goes without saying that both parties must agree with the intention of the novation and we must have the capacity to do so. Also, the new obligation must be different from the previous one.