This payment will be made up of the balance of the principal plus interest, which is the profit received by the financial institution or lender, which compensates him for the time he did not have the money.

Financing needs

A person or company resorts to external sources of financing when its own resources are insufficient to generate sufficient surpluses to meet its needs or achieve its objectives and projects.

It is at these times when individuals or organizations turn to various entities of the financial system to request loans, whether personal, mortgage, production or student loans.

It is important to evaluate when it is necessary to acquire a loan and when it is preferable to save. In general, the following reasons can be established as valid for committing to a loan:

You cannot wait until you save the money and cover the need or goal you have (such as buying a house).

Not acquiring the asset is more expensive than buying it on credit (buying a computer for the children versus paying hourly rent per day for its use).

Credit will allow you to increase the profits of a business, or save on expenses.

When the lifetime of the good/service is longer than the lifetime of the credit, a person can acquire goods in two ways: saving or through credit; therefore, it is important to evaluate which is the best option, since the decision between saving and credit is only a matter of time and of medium and long term vision.