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Pro
09

The main amount of the loan and the interest rate are set by contract. These contracts are called fixed-rate loan contracts. These bind both the lender and the borrower to the agreement. Under a fixed-rate loan agreement, the lender cannot demand repayment as long as the borrower makes payments as planned. In addition, the borrower cannot prepay the loan without the lender`s consent. Potential Standard/Standard: A facility contract contains a standard provision to cover events, although these are not yet events that probably do not occur. These values are called default or sometimes potential values. They are often negotiated by borrowers who do not want to be exposed to „hair triggers“ from which they may lose access to their banking facilities. In the case of a fixed-rate loan (also known as a term loan), the interest rate remains the same for the duration of the loan. You can take advantage of a loan. B with a 15-year amortization term of five years.

During this five-year period, the interest rate would be „imprisoned.“ Some of the key definitions that appear in each facility agreement are: – there will also be a late payment clause that will increase the interest rate payable on amounts that are not paid at maturity. This default rate should be a clear reflection of the cost to the lender of the amount that is not paid at maturity. If the sentence is excessive, it may be unenforceable. LIBOR: The London Interbank Offered Rate (LIBOR) is a daily benchmark rate based on rates at which banks can borrow unsecured funds from other banks. It is generally defined for the purposes of a facility agreement by reference to a screen interest rate (usually the British Bankers Association interest rate for the currency and the period in question) or at the base rate of the reference bank, which represents the average interest rate at which the Bank can borrow funds on the London interbank market. Major negative effects: This definition is used in a number of locations to define the seriousness of an event or circumstance, generally determining when the lender can act in the event of a default or ask a borrower to remedy a breach of the agreement. This is an important definition that is often negotiated. This section contains the insurance and guarantees, commitments and delays that apply to each facility.