What Are the Pros and Cons of Margin Loans?

Security deposit refers to the money retained by one or both parties to the contract or to a third party to guarantee the performance of the contract. There are two main forms of security deposits that are popular in real economic life: one is that the contract parties require the other party to provide security in order to guarantee the realization of their claims. Another form of security deposit is a security deposit that the two parties deposit to a mutually recognized third party (usually a notary office) to guarantee the performance of their obligations when the contract is established.

Loan deposit

Right!

It refers to the behavior that a financial institution collects a certain amount of money from the borrower in advance based on a certain percentage of the loan amount before the loan is issued. This part of the deposit is deposited before the loan is issued.

When issuing loans, banks often require the borrowing company or the guarantee company to provide a certain amount of security deposits, ranging from 5% to as much as 20%. This security deposit usually goes to the exclusive specific account opened by the enterprise (borrowing enterprise or guarantee enterprise) in the bank The ownership of this money belongs to the company, but the company cannot use it. The deposit is returned to the provider only when the corresponding loan is returned on time. Of course, the bank sometimes pays the corresponding deposit interest on the deposit at the same time.

Pre-received loan deposit refers to the behavior of a financial institution to advance a certain amount of money to the borrower according to a certain percentage of the loan amount before the loan is issued. This part of the deposit is deducted from the total loan amount.

The advance deposit loan system violates the relevant provisions of China's laws. Article 18, paragraph 2 of China's General Rules on Loans stipulates that borrowers have the right to withdraw and use all loans in accordance with the contract. If a financial institution implements a loan advance deposit system that results in a reduction in the total amount of loans actually received by the borrower and fails to meet the borrower's urgent need for funds, it is a violation of the creditor's legal rights.

Article 8 of the Announcement of the People's Bank of China on Prohibiting Unlawful Raising of Interest Rates clearly states: "It is strictly forbidden for any financial institution to increase the deposit and loan interest rates or use commission fees, co-hosting agency fees, deposit incentives, prized savings, loan deposits, and interest. Provisions, additional fees, consulting fees, and other names will disguisedly increase the deposit and loan interest rates. "Pre-received loan deposits are just a disguised act of raising loan interest rates.

In some financial institutions, there is an act of receiving advance deposits for loans. This approach has certainly played a role in ensuring the safety of funds and urging borrowers to repay, but it has great harms, such as: violation of interest rate policies and increase of interest rates; disguised deposits with loans to form a survival fund; aggravated The burden of the borrower has affected the reputation of the bank; different advance deposit loan deposit ratios are not processed one by one, which tends to breed illegal and corrupt behaviors; it has fostered the dependence of loan officers and fostered a climate of inadequate implementation of the "three investigations" system.