What is an avalanche fee?
The guarantee fee is a fixed term in banking. You will perhaps hear it once when you take out a loan secured by surety. The term "Aval" or the term "Aval" is used to describe the concept Guarantee, A guarantor or guarantor guarantees a binding commitment, with the own assets the loan amount, Aval fees are usually associated with the financing of construction investment. Banks can get the cost of a guarantee facility with a corresponding guarantee fee. These are the basic data of this term and here the fee is calculated on the basis of the sum of the guarantees. Thus you see that the bank has also found instruments here to market these credit collateral also lucrative.
Fees for the guarantee
Why can a bank also charge fees for guaranteeing a loan? A legitimate question, because the bank does not pay the expenses for the guarantee and the guarantee, but this is called in the category hidden interest. Aval fees can be demanded once or continuously over the year or the term of a credit from the lender. With every loan, the bank as a lender secures itself very precisely against the default risk. If the creditworthiness of the borrower is not sufficiently ensured, the bank can demand a guarantee from its customers. So you have many options to secure loans. Mortgages are mostly secured by the basic debts of the credit in the land register of the property. In some cases, however, the corresponding hedge is difficult to realize and lender, the bank is looking for further hedging opportunities. The bank requires the guarantee fee for this effort. This fee for the avalanche is calculated and calculated with about 1% of the guarantee sum. The guarantee sum does not necessarily have to correspond to the loan amount, but it is also possible that you can provide various collateral for a loan. On the other hand, it is also a matter of negotiating skills, because here you are relatively free, what kind of credit protection is possibly to be chosen. Banks charge these hidden costs here and you should be careful to get the credit as cheaply as possible. Finally, with a guarantee, most of your expenses are with you as customers and the guarantee fee is used obligingly, so that the bank once again receives fees.
Maximum limits of the guarantee fee
Avalanche fees are also due when a guarantee given to a credit guarantee is not paid. You can already see that this is interest paid in the form of a fee. The guarantee fee is quite lucrative for banks. Although the customer can provide sufficient collateral, the bank also secures itself with a guarantee. You will now ask yourself how this fee and the reason for a guarantee arise. The guarantee fee and the associated guarantee are required due to reasons which are not necessarily transparent. It seems that a rule exists here, but the lender can always demand the collateral he wants. Finally, the bank gives the money and you as a customer stand in a dependency relationship. The bank fee is always justified by the bank. You can not always understand this expenditure and the guarantee fee is capped at its height. The bank may charge a maximum of 2,5% of the guarantee sum. However, the guarantee fee will normally be 1% of the guarantee sum, because you are not to be prejudiced as a customer. At the moment, there are very low interest rates, and in the case of mortgage financing, the interest rates are about 1,3%, which means that the guarantee fee is also bearable and you have a further good possibility to secure loans through guarantees.