1. Under what circumstances do you need a loan?

Hello, 9.5% off generally means that the loan interest rate is based on the base interest rate and then 9.5% off. Please be informed.

2. Why is it necessary to borrow as much money as possible to buy a house?

With the continuous rise in housing prices over the past 20 years, more and more home buyers have chosen housing mortgage loans. For families who do not have enough financial resources to pay the full payment, loans help them realize their dream of housing, and also help them achieve wealth growth in the rising property market.

But in fact, even this part of the home-buying group did not know when they took out the loan. Invisibly, housing mortgage loans allowed them to achieve a multiplied anti-inflation effect through "liability depreciation."

My point of view

Not only those who do not have the financial resources to buy a house in full, but also those who have sufficient financial resources and the ability to pay the full price should borrow as much money as possible to buy a house and choose the best option. With a long term, you can borrow as long as you can!

Then why is this? The bigger the loan and the longer the term, the more interest you pay, right? And why is it said that buying a house with a mortgage loan allows them to achieve the best anti-inflation effect?

I have already elaborated on the strategy of using reasonable long-term liabilities, saving own funds for investment, achieving an organic combination of assets, liabilities and investments, and maximizing returns in many previous questions and answers. Today, I will talk to you about this topic mainly from the two dimensions of liability depreciation and asset appreciation.

"Debt depreciation", in layman's terms, means using the money that will become "gross" in the future to repay the real money borrowed now, which is the depreciation of debt.

01

◇Time is valuable.

·The time value of money refers to the appreciation of currency over time, which is the amount of appreciation after use. Also known as the time value of money.

·Definition given by experts: The time value of money means that a certain amount of money currently held has a higher value than the same amount of money obtained in the future.

·From an economic point of view, the reason why the purchasing power of one unit of currency now and one unit of currency in the future is different is because one unit of currency needs to be saved from consumption and consumed in the future instead. Then there must be more than one unit of currency available for consumption in the future as a discount to make up for delayed consumption.

To put it figuratively, the reason why the purchasing power of 100 yuan now and 100 yuan in the future is different is because if you save 100 yuan now, you will not spend it, but you will use it 20 years later. Then when you consume it 20 years later, you will have to spend more than 100 yuan to buy it, which is the price you paid for not spending the 100 yuan 20 years ago.

The above picture explains this problem from another angle.

In the 1990s, 10 yuan could buy 20 kilograms of vegetables, 10 kilograms of rice or 2 kilograms of pork. Let’s assume that you put 10 yuan in your pocket in the last century. At that time, you could buy 2 pounds of pork, but you didn’t buy it, so you forgot the 10 yuan in your pocket; and twenty or thirty years later, you suddenly dug out the 10 yuan. Money, I decided to spend it. But at this time, you find that you can no longer buy the 2 pounds of pork, and you need to add 50 yuan, which will cost you a total of 60 yuan.

This 60 yuan is equivalent to the purchasing power of 10 yuan twenty or thirty years ago. The "additional 50 yuan" is the "premium" for delayed consumption.

I think everyone, especially older friends, has personal experience with this explanation.

The actual purchasing power of money is far greater than the purchasing power in the next few decades. The purchasing power of money will continue to decrease as time goes by. This is a manifestation of the time value of money.

02

◇Back to the perspective of liabilities.

Liabilities, for most people, mainly consist of housing mortgage loans obtained from banks.

As we all know, housing mortgage loans are long-term loans of more than five years. Many banks limit the term of housing loans based on the age of the borrower plus the term, which does not exceed 65 or 70 years old. Assuming you are 35 years old, there is no problem with a loan term of up to 30 years.

So, let’s continue with examples.

Suppose you purchase a house worth 1 million yuan, pay a down payment of 400,000 yuan according to the down payment ratio, and apply for a housing loan of 600,000 yuan with a term of 30 years.

During these 30 years, you need to repay the principal of 600,000 yuan and the interest of 605,800 yuan, totaling 1.2058 million yuan.

It seems that the interest is slightly higher than the principal, which seems to be very high.

But one thing to note is that after 30 years, the cumulative 1.2 million yuan we have repaid to the bank will be equivalent to the current purchasing power of 200,000 yuan?

In other words, in 30 years, for the 600,000 yuan that the bank lent us at this point in time, we only need to use the 200,000 yuan at the same point in time to repay the bank's entire principal and interest. The net loss was 400,000 yuan.

This is "depreciation of liabilities." The longer the loan term, the more the bank loses as the lender; the more the borrower earns when buying a house.

The inflation and asset price increases caused by the additional currency issuance factors have laid the foundation for the nominal price increase of residential assets.

01

◇As long as the gross domestic product (GDP) is growing, an appropriate amount of currency must be issued accordingly, otherwise it will lead to economic imbalance.

In the economic development of a country, additional currency issuance is a normal state.

For example, my country's GDP was 10 trillion at the end of 2000; by the end of 2019, it increased to 99 trillion, which is equivalent to 9.9 times of 20 years ago.

At the end of 2000, my country's total currency circulation was RMB 13.4 trillion, corresponding to the total GDP at the end of 2000, that is, goods with a total market value of RMB 10 trillion;

Assume there is no additional currency issuance. If at the end of 2019, it is still 13.4 trillion yuan, corresponding to 99 trillion yuan of goods produced by the market throughout the year, then our commodity prices will need to drop 9.9 times. In other words, we assume that pork sold for 9.9 yuan per pound in 2000 will only sell for 1 yuan per pound by the end of 2019. If we look at it for a few more decades, it may be priced in cents or cents.

Let me ask, if you lose money every year raising pigs, who would keep raising pigs? Every year we work and the wages are getting lower and lower, who is still going to work?

Then considering this issue in reverse, it may be easier for everyone to understand why additional currency issuance is a normal phenomenon in economic development.

Let’s look at the chart below:

This is the chart of my country’s currency growth over the past 20 years.

From the above figure, it can be clearly seen that as of the end of last year, our country's money supply was 195 trillion yuan, which was 14.88 times that of 20 years ago, far exceeding the growth rate of GDP.

If the amount of additional currency issuance increases at the same multiple as GDP, from a macro perspective, prices will not rise; but the key is that the growth rate of money supply M2 is much ahead of the growth of GDP.

If we make a simple metaphor of the above theory, it is like this:

The total quantity of goods in the market increases from 1 to 10, and during the same period, the amount of goods circulating in the market If the currency increases from 1 yuan to 100 yuan, then the price of each item of goods will inevitably increase from 1 yuan/piece to 10 yuan/piece.

In this way, everyone can clearly understand why the property market has risen in the past 20 years. It is not simply driven by the contradiction between supply and demand in the housing market.

02

◇Under the influence of the new crown epidemic, the extraordinary issuance of global currency will lead to accelerated currency depreciation and an overall increase in asset prices.

The spread of the COVID-19 epidemic has caused an unprecedented impact on the global economy, and the epidemic crisis has turned into a global economic crisis.

The IMF predicts a global economic recession of 3% this year, accompanied by huge uncertainty. The IMF calls this crisis the "Great Lockdown."

First, in terms of severity, we are facing the largest recession since the Great Depression. The expectation that the global economy will shrink by 3% in 2020 only applies to the premise that there is progress in controlling the epidemic in the middle of this year; (if As the epidemic worsens, expectations will be further reduced)

Second, in terms of scale, this is a global crisis. Three months ago we expected that 160 countries would see per capita income growth. Now we think 170 Countries will experience a decline in per capita income;

Thirdly, in terms of particularity, the shutdown of economic activities is due to the necessity of epidemic prevention. It is therefore difficult to use traditional economic measures to boost demand. For the first time in the IMF's history, epidemiologists are driving macroeconomic forecasts.

Currently, many countries around the world, represented by the United States, have introduced quantitative easing policies, started printing money, and accelerated the issuance of currency to offset the impact of the epidemic on the macro economy.

At the end of June 2019, my country’s foreign trade dependence reached 32.5%. The high dependence on foreign trade has brought about two impacts on our country under the impact of the epidemic. The first is the imported inflation brought to our country by the additional currency issuance by overseas countries; the second is that under the situation that the foreign trade economy has been severely impacted, our country must also adopt "a proactive fiscal policy to be more proactive and a prudent monetary policy to be more flexible and appropriate." to cope with the economic downturn.

On April 20, based on previous RRR and interest rate cuts, my country’s LPR was lowered again. Among them, the one-year LPR was lowered by 20 basis points at one time, and the LPR of more than five years was lowered by 10 basis points, which once again verified that the country has opened a downward channel for interest rates and that additional currency issuance is on the way.

The extraordinary issuance of currencies around the world, including China's, will inevitably lead to accelerated currency depreciation, and at the same time push up the prices of physical assets such as gold and real estate.

Therefore, the additional issuance of currency has laid the foundation for the rise in real estate prices. It is highly likely that the nominal price of residential assets will rise for a long time to come.

Summary

For ordinary people, except for home loans, it is difficult to obtain long-term loans from banks. Only by buying a house can you achieve legal and compliant long-term liabilities.

Based on the above analysis, buying a house can effectively combat the inflation and price increases that will be transmitted to all aspects of our lives in about two to three years.

By taking on debt, we can multiply our anti-inflation effect through "depreciation of debt".

Therefore, it is extremely suitable to use a bank mortgage loan to buy a house. The higher the amount, the better, and the longer the term, the better.

3. Under what circumstances can I not get a loan to buy a car or a house?

When you take a loan to buy a car or a house, you may encounter the following situations and you cannot get a loan to buy a car or a house:

1. Bad credit: If your credit record is not good, the bank may Your loan application will not be approved.

2. Insufficient income: If your income level is not enough to pay the monthly loan payment, the bank may not approve your loan application.

3. Unstable financial situation: If your financial situation is unstable, such as having multiple loans or credit cards, the bank may not approve your loan application.

4. Not meeting the bank’s loan conditions: Each bank has its own loan conditions, and if you do not meet these conditions, the bank may not approve your loan application.

5. Insufficient collateral: If your collateral is insufficient to secure the loan, the bank may not approve your loan application.

6. Insufficient guarantors: If you do not have enough guarantors, the bank may not approve your loan application.

7. Other reasons: In addition to the above reasons, there may be other reasons why the bank does not approve your loan application, such as your career is unstable, etc.

In short, if your credit record is not good, your income is insufficient, your financial situation is unstable, you do not meet the bank’s loan conditions, you have insufficient collateral or insufficient guarantors, the bank may not approve your loan application. As a result, you cannot get a loan to buy a car or a house.

4. How is bank loan interest calculated? Under what circumstances is a loan required?

Nowadays, more and more commercial activities are held, and we use loan evaluation rates more and more frequently. Businesses need to develop, individuals need to start a business, etc. All situations require loans. So, how is bank loan interest calculated? When do you need a loan? Follow me below to find out more.

1. How to calculate bank loan interest

1. Generally speaking, a loan is a type of loan that is lent by banks and other financial institutions according to a certain interest rate and must be returned. Credit form.

2. The term of medium and long-term loans is generally more than five years, and five years is not included. This type of loan is generally for housing loans and investment in production companies, and the interest rates vary according to national policies.

3. The medium-term loan period is generally one to five years. Most of these loans are car loans and some small investment projects. These loans have fewer preferential activities and higher interest rates.

4. The term of short-term loans is within one year, inclusive. This kind of loan is mostly used for small consumption, and generally has some small discounts.

5. Regardless of the country’s preferential policy loans, policy bank loans do not calculate compound interest. Interest is settled on a daily, monthly, or quarterly basis. The annual interest rate is only converted into a daily interest rate, and the interest of the previous year is not calculated and rolled into the principal. The basic formula is: accrued interest = loan principal x number of calendar days in the interest accrual period x daily interest rate.

2. Under what circumstances do you need a loan?

1. Many people’s income is their main source of life, so when there is a large expenditure to consume, a loan is very much needed. Money for emergencies. Then loans are very suitable for people with low income and large consumption in the near future.

2. Some people live without restraint, spending whatever money they have, and many even start to live a "living in debt". When you have high debt and you happen to have a large amount of money to spend recently, you need to choose a loan.

3. Buying a house is also a major event in life, but many people spend all their money on buying a house and do not have enough money to decorate the house. You can’t live in a naked house just because you are short of money, so a loan is the best choice at this time.

Editor’s summary: How to calculate bank loan interest? And under what circumstances is a loan needed? I believe everyone will understand after reading the article. I hope the above content can bring you some help and suggestions. If you want to know more relevant information, please continue to follow us!