When assessing the economic-financial characteristics of the financial product or service to be purchased, the decision must be made without losing sight of its fit within the financial situation of the person who is going to purchase it. Once we have a clear idea of the product, before closing the transaction, it is suitable to have a global vision of the following aspects:
- The initial impact of the acquisition.
- Flows associated with the life cycle of the product.
- The influence of taxes.
- What disbursements must be made, initially and / or in the future.
- What expenses the formalization of the transaction entails.
- Flows associated with the life of the product:
- Income accrued and, where appropriate, received.
- Possible revaluations.
- Commissions to pay.
- Amount earned at the end of product life or when the asset is sold.
Savings, investment and retirement planning
As seen above, the choice of a specific savings product should be made once the following aspects have been considered:
- The legal nature of the product.
- Its economic-financial characteristics:
- Return.
- Risk.
- Liquidity.
- Its tax treatment.
- Its fit into the overall financial situation of the person who is purchasing the product.
- In the case of retirement planning, it is important to take into account the degree of complementarity with the public pension system, if applicable.
Credit
Although from a different perspective, it is necessary to carry out a similar approach to that made in relation to savings or investment when a person applies for a credit transaction. The basic questions to consider are the following:
- What type of transaction is it?
- What is its legal nature?
- What guarantees does the borrower provide?
- Is there a guarantor of the transaction?
- What are the expenses involved in the formalization of the transaction?:
- Arrangement and / or origination fees.
- Cost of appraisal of the properties provided as collateral.
- Notary fees.
- Registry expenses.
- Taxes
- What is the term of the transaction?
- What are the timetable and the time frequency of the regular payments?
- The applicable interest rate, is it fixed, variable or mixed? In the latter cases, what is the reference used for its reset and what are the dates to carry it out?
- Are early repayments of the loan allowed? Moreover, if so, what is the applicable fee?
- Is the early cancellation of the credit foreseen? Moreover, if so, what is the applicable fee?
- What are the expenses arising from the definitive cancellation of the transaction?
