What is debit and credit in simple words. Credit - what is it, types, functions of credit What is credit definition

A loan can be issued to the state, a municipal body, a commercial enterprise or an individual, provided that the interests of the lender and the borrower coincide. A prerequisite is the provision of guarantees for the return of borrowed funds at the end of the loan period.

What is lending, how it happens

Lending is understood as a system of relationships between the parties, it implies the provision by one party (creditor) to the other (borrower) of a certain amount of funds, which must be returned within a specified period. Banks, microfinance organizations, pawnshops, individuals can act as creditors. As borrowers - government agencies, individuals and legal entities. When making some transactions, guarantors or co-borrowers may be additionally involved, who bear, respectively, subsidiary and joint and several liability for repayment of the debt.

Depending on the external manifestation, form and organization of credit relations, established types of loans are distinguished.

According to their purpose

• agricultural;
• consumer;
• industrial;
• trade;
• investment;
• mortgage.

To ensure

• unsecured;
• with collateral.

By type of repayment

• repaid in one payment;
• payable in installments.

By type of interest rate

• floating rate;
• with a fixed rate.

Each program has its own characteristics, is accompanied by a different degree of risk, so lending conditions differ not only depending on the lender, but also the type of loan.

Popular loans

The lending market is formed based on the needs of borrowers. Today, there are several lending options that are most often used by borrowers.

Microloans MFIs

Microfinance institutions provide fast and convenient loans. The main reason for their popularity is availability. Money can be obtained under a simplified scheme without income certificates, collateral and guarantors. Many MFIs offer an online credit card service that allows you to apply and receive money without leaving your home. Such loans have significant drawbacks - a high interest rate, which reaches 1-2% per day, and a short loan term, which rarely exceeds 30 days.

Bank loans

Banks offer a wide range of loan programs, which allows you to get the right amount for any purpose. The conditions for granting loans are among the most favorable. The interest rate ranges from 11-23% per annum, depending on the chosen program.

In addition to traditional loans, banks issue credit cards. Its holder can use it at his own discretion (make purchases, withdraw cash, store his own funds). As long as the credit limit is not used, the borrower does not have obligations, which allows the credit card to be used as a reserve.

There are special programs for buying an apartment, a car, a land plot. The interest rate on them is 3-5% lower than that of consumer loans, and the loan term can be up to 30 years (for mortgages).

The disadvantages of bank loans include a complicated registration procedure and high requirements for the borrower, which often becomes the reason for refusal.

Lombard lending

Pawnshops lend exclusively on the security of liquid property. It can be household appliances, computer equipment, antiques, jewelry, and even vehicles. Credit history, income of the borrower does not affect the decision to issue a loan. The assessment of the subject of pledge is carried out by the employees of the pawnshop, after which the maximum amount available for issuance is announced (40-70% of the appraised value). The registration procedure takes from 15 minutes to 3-4 hours. The disadvantage of such lending is a high interest rate (4-7% per month), and the term is usually no more than a month. It should be noted that there is a high risk of loss of collateral in the event of a breach of obligations by the borrower.

Lending is one of the factors determining the development of the economy. It is a source of investment for enterprises and stimulates production by increasing the purchasing power of the population. The state acts as a regulator, implementing monetary policy aimed at increasing the availability of credit and reducing its cost.

Credit is public relations established between a credit institution and a borrower regarding the transfer of funds from a lender to a borrower in the form of a loan on certain conditions. The contract to be concluded prescribes such provisions as the amount of transferred funds, the term for granting a loan, and the remuneration of the lender. For some people, a loan is a vital necessity, without which they cannot imagine a full life, but for others credit is something like a debt hole, which they are trying to get around in all possible ways. So, let's talk in this article in this article on such an interesting topic and reveal all aspects of the concept of credit.

The concept of credit in economics

Credit relations can take a variety of forms, for example:

1. Commercial
2. Leasing
3. Factoring
4. Bank

Credit relations are born when, at a certain stage of the production cycle, the released value of one economic entity does not enter into new production relations. In this case, the resulting value can be transferred to the use of another economic entity, which needs additional funds and is ready to give more after a while.

Functions

Credit performs several significant functions in the economy:

1. Redistributive function - consists in the distribution of the value released at some point from the lender to the borrower on the terms of its return. This function finds its expression both at the level of individual enterprises and industries, and at the level of the national (individual state) and world economies.
2. The creation of credit instruments of circulation, as a function of credit, implies the existence of a banking system and, along with it, the spread of non-cash payments and mutual obligations, which led to the emergence of means of circulation and payment.
3. Reproductive function - manifests itself in two ways, consists in the following points: on the one hand, obtaining credit funds stimulates the development of entrepreneurial activity and the provision of production, and on the other hand, it negatively affects the cost, final price and sometimes the quality of the goods.
4. The stimulating function of the loan means that the loan is able to stimulate the development of the enterprise if it does not have the necessary amount of money. Plus, the payment of interest on the loan will require an increase in production efficiency.

Forms

The value transferred from the lender to the borrower can be presented in different forms: monetary, commodity or mixed.

The role of credit is difficult to overestimate. Thanks to this form of economic relations, an enterprise can receive a significant amount of working capital at a time when they are urgently needed due to the unstable economic situation. Thanks to loans, it is possible to ensure a stable increase in fixed assets, which will undoubtedly increase the potential of the enterprise and speed up production.

To the same extent, credit policy affects the liquidity of the banking system.

Kinds

Initially, it is worth making a division into bank and commercial (transferred from one enterprise to another) loans. The most common types of loans provided by banks are:

• Consumer credit - a cash loan provided to individuals and aimed at the purchase of goods (household appliances, furniture, tools, etc.). It is characterized, as a rule, by a high interest rate and a small loan amount.
• A car loan is a loan provided to individuals and legal entities for the purchase of automotive equipment. Compared to the previous type of loan, a car loan has a larger size, and the interest that you have to pay to the lender is slightly lower. Moreover, the lowest interest is provided for the purchase of domestically produced cars. In this case, the vehicle can be used as collateral.
• Mortgage is the longest and most significant loan provided to individuals and legal entities for the purchase of real estate. As a rule, it features lower interest rates and longer loan terms. A mortgage loan is issued against the security of the purchased apartment.
• Loan for education - characterized by low interest rates, the presence of subsidies. It is aimed at obtaining paid education by the debtor (college, university, etc.).
• Money for small businesses - sometimes they are especially needed. These are funds provided to organizations and private entrepreneurs, with the aim of stimulating their activities, paying salaries to employees, purchasing equipment, etc. To obtain a loan for an individual entrepreneur, it is necessary to collect documents that are different than for a regular loan.
• Overdraft - funds debited from the client's current account when his own funds are insufficient for the operation. That is, the automatic provision of funds that are missing for the transaction. Such debt is repaid by depositing funds into the current account.

All of these relationships can be divided into target and non-target. The target ones include, for example, a loan for education or the purchase of real estate - such relationships have special conditions (both in terms of duration and rates) and require reporting to the lender. Non-target loans include loans for urgent needs, consumer loans - including a loan on trust - without certificates and guarantors, often with bad credit history- upon presentation of only one passport of a citizen of the Russian Federation (but as a rule, for a not very significant amount, it is usually issued in cash).

Another criterion for dividing may be the availability of guarantees for the return of funds by the debtor. Rates on secured (real estate, car, etc.) loans are lower than those of unsecured ones (in the latter case, the rate can reach up to 25% per annum).

On-lending

It is no secret that different banks issue loans on different terms. Re-lending is the receipt of a loan on more favorable terms for full or partial payment of an earlier loan. Sberbank, for example, has mortgage lending programs.

The meaning of the term in accounting

In contrast debit, a loan is understood as the right side of accounting documents, which records the funds withdrawn from the accounts of the enterprise, as well as the debts and obligations of the organization. Shows a decrease in funds in active records and an increase in passive ones (there is a separate article about assets and liabilities in accounting). In this case, the stress is on the first syllable.

From the author

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At the moment, many Russian banks offer various loans on a variety of credit terms. Let's figure out what a person who has never encountered the issue of lending should know.
Lending is one of the forms of financial relations in which one party gives a certain amount to the other with the condition of return and guarantee.

Most often, a loan is an urgent form of loan and is provided to both individuals and legal entities. The lender needs a guarantee that the borrower will repay the entire amount, so he may require collateral in the form of certain property or the involvement of a guarantor who will be responsible for the return of funds.
In the life of any person, a situation can happen when money is urgently needed. There are several types of loans. The first of these is an express loan, in which the bank issues a certain amount of money in order to pay for a specific service or purchase of goods. All funds are immediately transferred to the account of the company that provides the service to the borrower. This type of lending is issued quite quickly and only documents that confirm the identity are needed. The key disadvantage is the high interest rate, reaching 60%, which is not very beneficial for the borrower.
Non-targeted loans are another way of lending, which includes the receipt by the borrower of the amount for any need. The bank does not control the use of these funds. In cases where we are talking about large sums of money, the bank may ask to attract a guarantor. The standard package of documents is a citizen's passport, a copy of the last page of the work book and income information.
Another method of receiving money is credit cards. This is an ordinary plastic bank card, to which the bank transfers credit money to the borrower. A feature of such lending is that the bank does not charge interest for the use of money during a certain initial line. Also, when repaying a certain amount on a loan, the amount of available money on the card increases.
A car loan is one of the types of consumer loans, which involves receiving money intended for the purchase of a car. The bank transfers the entire amount directly to the account of the car dealership and requires a deposit, which is the car itself. Also, with such lending, it is mandatory to insure the car against damage or theft.
A mortgage loan is the most difficult type of lending today. Buying a home is quite expensive and, most often, the income of one person is not enough to purchase real estate. Therefore, a mortgage allows you to take a loan for up to 4 people. The borrower needs to provide a package of documents to convince the bank of its viability to pay. The real estate itself acts as a pledge, and a loan can be taken in any foreign or domestic currency. In this case, the borrower is obliged to insure his life.
The main method for assessing the solvency of the borrower is to provide the bank with a statement of income for the last three months and a photocopy of the last page of the work book. The bank determines whether a person will be able to allocate a monthly loan payment from his budget. If not, then, most often, he is denied extradition.
A big plus of lending is that you can take the necessary amount of money immediately and not postpone the purchase for a long time. When buying a home with a mortgage, the borrower can be completely sure that the transaction is legally correct and there are no “pitfalls”. The main disadvantage is the rather high interest rates. You also need to think about how to repay the loan if the borrower lost his job or him. When applying for a loan, it is important to pay attention to everything that is written in small print and never sign an agreement without looking.

The expression "reduce debit with credit" is probably familiar to everyone. Many people don't even understand what that means. Therefore, below we will try to explain as simply as possible what debit and credit are.

What is accounting for?

Why was bookkeeping invented? In order to take into account the property of the enterprise, its obligations, capital and in general all its activities.

Imagine if you counted goods in pieces, gasoline in liters, and money in rubles, it is not clear how to bring it all together? How to understand whether the company is making a profit or loss, how much goods are left in the warehouse and how much money is in the current account?

Therefore, all transactions, whether it is the receipt of amounts to the accounts of the enterprise, the write-off of material assets or settlements with suppliers, are recorded in accounting in monetary terms.

The basic rule of accounting is the principle of conservation of value. Its essence is that if some property “came”, then the same amount should “leave”. Or vice versa - when writing off a certain amount, you must definitely receive something in return and write it down in the parish.

Debit and credit

What we talked about above is called the principle of double entry. That is, any action in the organization must have 2 operations - incoming and outgoing.

To make it easier to keep such records, the concepts of "debit" and "credit" were introduced. Thus, each account is divided into two halves: a debit is an income, and an expense is a credit, the left and right columns of the account, respectively.

To make it clearer, imagine that you go to the store, take out 2,000 rubles from your wallet (let's call it "Cashier") and buy a dress. In this case, the amount leaves the credit of the "Cashier" account and comes to the debit of the "Shop" account. To reflect this in accounting, you need to take both of these accounts and write down 2,000 rubles 2 times:

Please note that the value always goes out of the credit of the account, but goes into the debit. This transfer of value is called double posting.

What is a debit and credit balance

To understand what a balance is, let's look at a simple example again.

So, you have decided to open a greenhouse sales outlet. It was in autumn. At the same time, to make it easier for us, your organization has no money, no debts, or even the greenhouses themselves yet. But on the other hand, there is already a buyer who wants to buy three greenhouses from you for a total of 100,000 rubles and leave them (greenhouses) with you for storage until spring.

• Step 1. The buyer pays you 100,000 rubles and calmly waits for spring, that is, you have not yet shipped the greenhouses to him. Let's make an accounting entry: since the money went from the buyer's wallet to your cash desk, we get such a double entry (our account names are conditional, of course):

• Step 2 You decide to transfer almost the entire amount received from the buyer (namely 90,000 rubles) to your account in the bank. That is, this money left your cash desk (we write it down on credit), but it came to the current account (we write it in debit). This is what this operation looks like in double entry:

• Step 3 You find a manufacturer who will supply you with greenhouses, and conclude an agreement in the amount of 160,000 rubles. At the same time, you agree that this month you will transfer only half of the amount (that is, 80,000 rubles), and pay the rest later. You transfer 80,000 rubles from the current account to the supplier. This will show up in your account like this:
• Step 4 You received greenhouses from a supplier in the amount of 160,000 rubles. So, in the credit of the “Supplier” account we write 160,000, in the debit of the “Warehouse” account the amount will be the same:

This is the end of the first month of your work and it's time to take stock.

Credit and debit turnover

For the Buyer's Wallet account, the credit turnover was 100,000 rubles, and the debit turnover was 0.

"Cashier": debit turnover - 100,000 rubles, credit - 90,000 rubles.

“R / s in the bank”: debit turnover - 90,000 rubles, credit - 80,000 rubles.

"Supplier": debit turnover - 80,000 rubles, credit - 160,000 rubles.

"Warehouse": debit turnover - 160,000 rubles, credit - 0.

What is a debit balance

Now it remains to withdraw the balance that turned out for all accounts. This value will be called the "Final Balance". To calculate the balance, it is necessary to minus the smaller one from the larger turnover.

Consider, for example, "R / c in the bank." The debit turnover is 90,000 rubles, and the credit is 80,000. The first amount is larger, which means that the balance here is debit: 90,000–80,000 \u003d 10,000 rubles. We write it in the debit part of the account and enclose it in a red rectangle.

Now pay attention to the “Supplier” account: here the debit balance is 80,000 rubles, and the credit is 160,000. In this case, the balance turned out to be credit: 80,000 - 160,000 \u003d 80,000 rubles (also in the red rectangle).

We do the same with the rest of the accounts. As a result, we get the following result:

Let's look at what the balance means for each of these five accounts.

According to the Buyer's Wallet account, there is a credit balance and it reminds you that in the spring you must give the buyer a greenhouse in the amount of 100,000 rubles.

The balance on the account "Cashier" is debit. It means that the cash desk of your organization is 10,000 rubles.

The debit balance on the third account shows that you have another 10,000 rubles in your bank account.

On the fourth account, we got a credit balance that will not let you forget that you owe the manufacturer 80,000 rubles.

Well, the last account with a debit balance tells that greenhouses in the amount of 160,000 rubles are in your warehouse.

What's next?

You continue to work, and the balance sheet should reflect subsequent operations. But first, it is necessary to transfer the ending balances of the previous period to the beginning of the new one. Such balances will be called incoming, they must be written in the appropriate column: debit balance - on the left, credit - on the right.

Let's go back to the example. You decided to transfer another 7,000 rubles from the cash desk to the current account. Two accounts are involved. First, do not forget to transfer the incoming balances over them (circled in green in the figure below), then we record the wiring for 7,000 (in Kt "Cashier" and in Dt "R / s").

No further actions were taken on the accounts during this period.

At the end of the 2nd month, we first calculate the turnover, while we do not pay attention to the opening balance yet (turnovers are circled in blue). Then we calculate the final balance (in the red rectangle), already taking into account the incoming balance. It turns out the following picture:

Of course, these are rather primitive examples. In fact, accounting is much more complicated. But it is quite possible to get the basic concepts of what debit, credit and balance are from this article.