The debtors of a loan, especially when it comes to a mortgage, commit themselves for long periods in order to be able to repay their loans. But the credit they have been given allows them to instantly finance a project they could never have financed without the participation of the bank or credit agency they had used.
This angel financing is done through a banking operation called loan disbursement. Here’s everything you need to know about loan disbursement, or loan disbursement.
What is meant by loan disbursement?
In banking jargon and in the area of credit, loan disbursement, also known as credit disbursement, refers to the fact that a credit institution or a bank will take money out of its bank accounts and transfer it to those of its bank. customer.
By this operation, the creditor, after agreeing to lend a sum of money to his debtor or client, makes available to him the agreed sum of money so that he can carry out the projects for which he has taken out the loan.
Loan disbursement explained concretely
Specifically, Jean and Marie wish to buy a house of 300,000 euros, put on sale by Mr. and Mrs. Denver, but their personal savings is only 100,000 euros. They will then need to resort to a home loan. This can be granted by a bank, up to 200,000 euros missing.
Once the file is established, the bank will study it and give its agreement. The establishment will then release funds, namely 200,000 euros, so that Jean and Marie can buy their home from Mr. and Mrs. Denver. It is thanks to this loan disbursement operation that Mr. and Mrs. Denver will sell their house to Jean and Marie.
The latter then undertake to repay to their bank all 200,000 euros borrowed and released when the loan disbursement. This loan disbursement operation carried out at a time T will give rise to a repayment obligation which will often be spread over a long period of up to 20 or 25 years. The principle is the same for consumer loans, even though the sums are generally less important.