The definition of borrower is the person or entity that receives money in loan, accepting the obligation to return it according to the agreed conditions that will include the payment of interest.
Quite often the concept of borrower is confused with a lender. The lender is that he lends the money and charges interest for it, with the intention that that amount is returned within the established period of time, while the borrower is that he receives the money on loan and presents the obligation to return it with fixed interests and always within a term.
Examples of borrowers include the couple who goes to a financial institution to request a mortgage with the intention of acquiring a home or a private entity that uses a savings bank to have credit with the intention of assuming a series of investments or facing the most immediate payments.
The figure of the borrower is backed by rules that protect their rights and obligations. The loan agreement includes the agreement between the lender and the borrower.
Borrower rights and obligations
As with any other commercial figure, the borrower also has a series of rights and obligations:
Borrower's rights
- Having a credit tailored within the term stipulated in the contract.
- Receive the documentation of the contract, as well as the settlement documents and proof of payment of the different movements.
- Consult the CIRBE to confirm the possible debts with other banking entities.
Borrower's obligations
- Return the money granted within the time limits set or in the installments established in advance.
- Pay the interest on time, in addition to the fees associated with the loan.
- Provide the credit institution with all the information about your financial situation, in order for them to verify the risk of the loan operation.
- Use the borrowed funds for the reason for which it was requested.