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Credit - a public relations established between the lending institution and the borrower regarding the transfer of funds from the lender to the borrower in the form of loans under certain conditions. Concludes an agreement prescribes provisions such as the size of the transferred funds, term of the loan, the lender a fee. For some people credit - is a vital necessity, without which they do not represent a full life, and for other loans - is something like a debt trap, which they are trying to get around in every possible way. So let this article be discussed in this article on a topic of interest and uncover all aspects of the concept of credit.
Credit relationships can take many forms, for example:
Credit relations given birth when at a certain stage of the production cycle freed cost of a single economic entity does not enter into new relations of production. In this case, the cost can go formed in the use of another economic subject, that additional funds are necessary and sufficient, he is willing to give some time more.
The loan carries several important functions in the economy:
Redistributive function - is to distribute freed at some point the cost from the lender to the borrower on the terms of its repayment. This function is expressed at the level of individual companies and sectors, and at national level (individual state) and world economies.
Creating a credit reference tools like credit function implies the existence of the banking system, and along with it the spread of non-cash payments and mutual obligations that led to the emergence of means of circulation and payment.
Reproduction function - manifested in two ways, is the following: on the one hand, to obtain credit encourages business development and support of production, and on the other - has a negative impact on production costs, the final price, and sometimes as a commodity.
Stimulating the function of credit - means that the loan is able to stimulate the development of the company if it does not have the necessary amount of cash. Plus, the payment of interest on the loan will require increased production efficiency.
Cost transferred from the lender to the borrower, can be presented in various forms: cash, marketable or mixed.
The monetary form of credit is the most familiar with the individual point of view. This transfer to the use of other cash-face with their subsequent return in a larger size. There is no doubt that this form of credit relations is the most common in the current economic realities. Cash Loans widely among individuals and legal entities, and states in the external trade turnover.
The role of credit can not be overestimated. This form of economic relations, the company can get a significant amount of working capital at a time when they are desperately needed due to the unstable economic situation. Through loans may provide a stable capacity of fixed assets, which undoubtedly increase the potential of the enterprise and accelerate production.