Credits

A credit agreement is, as the name indicates, an agreement established between a credit institution (creditor or lender) and a customer (debtor or borrower), whereby funds are made available by the institution to the customer for a certain period of time and subject to a set of conditions, which constitute the rights and obligations of the contracting parties. The customer is obliged to repay the amount borrowed over the agreed period, plus interest and other charges.

Credit may only be granted by credit institutions and certain companies registered for that purpose with Banco de Portugal.

A credit intermediary may intervene in the process of granting credit, namely by presenting proposals and assisting clients with the preparatory acts for contracting the credit. However, credit operations will always have to be contracted with an institution authorised to grant credit.


The most common types of credit operations contracted with private customers

Home loans

This credit can take the form of:

• Credit agreement for the purchase or construction of permanent owner-occupied, secondary or rental housing;
• Credit agreement for the acquisition or maintenance of property rights of existing or planned land or buildings;
  
  

Note: In addition to home loans, there are other mortgage loans which are subject to the same rules as home loans, namely: i) credit agreements which, not corresponding to home loans, are secured by a mortgage or by another equivalent security usually used on real estate; and ii) the leasing of real estate for permanent, secondary or rental housing.

Consumer credit

This credit can take the form of:

• Personal credit: Credit for various purposes. The amount, term and repayment method of the loan are defined in advance;
• Motor vehicle credit: Credit for the purchase of a car or for the purchase of other vehicles;
• Revolving credit: Agreement in which a maximum credit limit (ceiling) is established which can be used over time and which can be renewed as the outstanding balance is being repaid.
  
  It includes, among others:
• Credit card: Agreement that allows the use of credit, through the card, up to a previously agreed maximum limit. The amount used is repaid on the date and under the conditions agreed with the card issuer. After payment, the customer is again able to use the credit within the established limit. It allows you to make payments for goods and services and, in some cases, withdraw cash on credit (cash advance).
• Overdraft facility: Agreement that allows the customer to access funds that exceed the balance of the demand deposit account, up to a maximum credit limit defined in the agreement.
• Line of credit: Agreement of indefinite duration in which a maximum credit limit is established which is made available in the customer's account.
• Banking current account: Agreement of predefined duration in which a maximum credit limit is established and no fixed schedule for repayment is defined.
• Overrunning: This is an overdraft accepted by the institution, which exceptionally allows a customer to have funds available that exceed the current account balance or the agreed ceiling for the overdraft facility.