The English word discount translates as “discount” and nothing more. The word “discount” was introduced into the Russian language for economic reasons. It displays the difference in price in banking and stock exchange terminology. The original word “Discount” is pronounced this way in a foreign language, which is where the Russian “discounter” comes from - the one who gives these same discounts.

The term “discount” is used in different fields of activity, but they all refer to finances transferred from one hand to another.

1. Credit discount. The collateral for payment may be any movable or immovable property. But a discount can be a reduction or understatement of the actual price.
2. Trade discount. Just a discount on any product in a store or supermarket, meaning a reduced price for the product. Why they called it a foreign word is a little unclear. “Discount” is a long-familiar word and all ordinary people know its meaning very well.
3. Exchange discount. Securities and all kinds of expensive bonds are purchased at a price that is lower than the stated price.

Trade discount

In trade, a discount can be provided in two ways.

Cash discount. Usually discounts are written on the price tags in any store and people willingly buy such goods. Simple psychology - if there is a discount on the price tag, the product is taken off the shelves faster than before. This is based on the entrepreneur’s desire to increase his own sales. Even if the discount is small, the goods will leave the warehouse faster and will not gather dust with unnecessary trash for years. The difference in price may be due to a temporary increase, and then the discount will return everything to its previous place, and people will be more willing to fall for it. Such actions bring real profit, and not the dreary expectation of sales.

Trade discount. Valid for wholesale purchases. Usually appointed for the fastest removal of goods from warehouses and quick disposal of them. It works for entrepreneurs who get used to the discount and they quickly get used to the trading base. To leave for a competitor requires a lot of thought and finding out his financial history and integrity in relationships.

Credit Discount

Banks are usually associated with providing large loans. In this case, there is a need to provide a decent collateral that is of high value.

The discount percentage provided by the bank can reach up to 50%. Quite often this angers most clients. Not only that, the cost of an apartment, car or cottage is artificially lowered by bank employees, which may categorically not coincide with the client’s assessment. Also, extortionate interest is constantly charged for using the amount issued.

The employees can be understood, because their logic is simple. The client may not pay on time, he may experience force majeure or simply escape from fulfilling the loan agreement. The pledged property must be liquid and of high value. (Liquidity – quick sale of collateral and its good appearance). The value of the mortgaged property is also taken into account, because it can either increase in value or, on the contrary, lose a lot. Possible legal fees and other expenses encountered. In other words - collateral must cover all financial losses.

Exchange discount

Approximately the purchase of bills of exchange or discount bills, as well as bonds. The difference is expressed in the acquisition of securities on the exchange market at a reduced cost. This is almost very close to the banking sector. They know many financial issues, ways to solve them and prevent failure. They face different bank rates, which can constantly change depending on the type of activity of the company and its success in mastering new technologies.

The face value of bonds of various types most often turns out to be slightly lower than the printed price on the precious paper. This is what turns out to be a discount when selling.

The cost of bonds changes all the time and here comes dependence on the person who printed the securities. How he behaves in the media, how his company takes steps towards prosperity; In general, the level of trust in the leader plays an important role.

The time of holding a valuable bond, unless the purchase and sale agreement states otherwise, can last as long as desired. The owner will only have to wait for the shares to rise in price and sell them; or with a sufficient number of securities join the board of a developing company.

Discounting in this area again involves various types of loans, but with the indispensable condition that the bonds will increase in price, implying high profits. And the time expected to complete the financial transaction must be taken into account.

More and more often we can observe a situation where a borrower who is in significant arrears is offered a discount to pay off the debt. Pay less, but now. Let's figure out why this happens and what the benefits are for the lender.

It is profitable for the bank to sell debts

In accordance with the Letter of the Bank of Russia dated April 18, 2017 No. 41-1-3-7/484 " ", credit institutions must create reserves for possible losses “on loans” - in some cases such a reserve reaches 100% of the issued loan It is not profitable for “banks” to reserve money for unsecured loans. Also, a large number of overdue debts poses existential risks. By forming a solid reserve when selling, closing or writing off a “bad asset,” the credit institution releases reserves and makes a profit.

Why is it unprofitable for a bank to sue?

There is no guarantee that, based on a positive court decision and additional costs, they will be able to recover something from the borrower - in other words, the bank may remain in the same position as before. The process of collecting debts from clients is “expensive” and does not guarantee the return of the amount, and may even cause a loss.

What loans does the bank sell?

Typically, a bank sells consumer loans and credit cards.

What loans does the bank not sell?

The bank does not sell mortgages or car loans. An apartment or a car is collateral that he can seize from the client. The bank has something to collect, unlike financial loans - in the absence of finance, it is not possible to collect them.

Is the sale of credit debt allowed by law?

The first question of a debtor who has received news of the assignment of his loan to an agency is whether banks have the right to repay the debt? According to , banks and microfinance organizations have the right to assign claims for repayment of loans to collectors without the consent of the borrower, unless otherwise provided by the agreement. In 99% of cases, Russian banks indicate in loan agreements that the borrower’s consent to the assignment of debt is not required.

What articles regulate the procedure for transferring claims?

First of all, this is the “Grounds and procedure for the transfer of the creditor’s rights to another person,” which states that the right (claim) belonging to the creditor on the basis of an obligation can be transferred by him to another person under a transaction (assignment of the claim) or can be transferred to another person for based on the law. As for the agreements themselves and the corresponding rules for the transfer of debt, these provisions are disclosed in the “Conditions and form of debt transfer”.

When does a bank sell debts?

First - for short periods of overdue debt without carrying out serious collection measures, then - after work has been carried out to repay the debt and a decision has been made about the low probability of its repayment, usually after 120-180 days of delay.

In what cases do MFOs sell debts? Almost all of them. MFOs, as a rule, do not have serious services for working with problem loans; the increased risk of non-repayment is initially built into the interest rate. But this happens no earlier than after a month or two of delay - during this period, microfinance organizations hope to receive high fines in case of repayment.

Who does the bank sell debts to?

Selling debt to collection agencies is common. It happens like this: banks announce a tender for the sale of a portfolio of debtors, organizations apply for it and offer their price. After the completion of the auction, assignment agreements are concluded with the winners of the tender and, accordingly, the rights of claim are transferred to them. These portfolios, as a rule, contain from 1 thousand to 20 thousand credit cases, that is, debts are redeemed in large pools. Debt with a nominal value of 100 thousand rubles. can be sold for 1 thousand rubles, that is, for 1% of the debt amount. Its price also depends on the number of debts in the pool, that is, the more debts are purchased, the less they will cost in total. But in addition to this, individuals can act as third parties.

How is an offer to close a debt at a discount formed and why?

Considering the problems that the creditor faces in collecting overdue debt and the high risks in carrying out legal work, creditors have increasingly begun to offer their clients to close the debt at a discount. As a rule, such a discount is 30-50%. In this case, the amount must be closed with a one-time payment, which is not always beneficial for the client, but beneficial for the lender. In addition, aggregator companies are appearing on the secondary debt market to simplify this process for the lender and borrower. In this case, clients have the opportunity to pay off the debt not only with a discount, but also with comfortable installment payments.

In the financial sector, it means the difference between the real future value of a financial instrument (liability) and its acquisition price, and discounting refers to finding the current value of an asset if its future value is known. loan implies a change in the amount of obligations on it towards a decrease in the final amount to be repaid.

In fact, as a result of discounting, the amount of the obligation is reduced, which has an undesirable effect for the creditor. However, credit discounting is used for the following purposes:

• to sell an asset in order to quickly accumulate resources;
• to reduce an asset in the event of borrower insolvency;
• to calculate the current amount of an asset as a result of the influence of external factors.

Specifics of applying the loan discounting method

When selling an asset to accumulate resources. In some cases, the lender may urgently need the entire amount of the asset, or there is a risk of non-repayment. Then, to free up resources, the debt is assigned to another person at a discount. For the creditor, the benefit of such a transaction is the immediate receipt of resources at its disposal, for the successor - the purchase of an asset at a reduced cost with the subsequent receipt of the full amount of the obligation.

When an asset is reduced in the event of the borrower's insolvency. According to the terms of the loan agreement, it is usually provided for in the event of late repayment of debt (fines, penalties, penalties, increased interest on overdue debt). Due to various circumstances, the financial situation of the borrower may worsen, and due to additional sanctions, the amount of debt may increase many times over. Discounting in this case makes it possible to conclude a compensation agreement, which provides for the creditor to write off part of the debt in the event of repayment of the main part of the loan. To apply for a discount on the loan amount, the borrower must have compelling reasons to explain his financial insolvency.

When calculating the current amount of an asset. Such a calculation is another discounting operation that is carried out to evaluate the performance of an asset and determine its actual profitability. In this case, creditors determine its real value at the time of full repayment. The size of the discount in this case will depend on price indices, inflation levels, changes in exchange rates and other factors. For the borrower, discounting the loan will allow him to determine how much he will overpay for the use of resources without taking into account variable factors.

Loan discounting method (calculations)

When discounting a loan, a variety of approaches to the process can be used. In a simplified version, the amount of cash flow is determined as follows:

S O = S T /(1+d) n

S O – current (real) amount of liability;

S T – future (full) amount of the obligation;

d – discount rate;

n – number of time periods.

Depending on the terms of the loan (change of obligation), when calculating the discounted value, the frequency of debt payments, the growth rate of the monetary obligation, the minimum profitability limit, the borrower and other parameters may be taken into account.

When applying to a bank to obtain a loan secured by a particular property, a businessman (as well as an ordinary citizen) inevitably faces an assessment of the collateral property.

The key point of valuation is discounting. Let's analyze this concept and see how in practice is the determination of the loan amount adequate to the collateral.

What is a discount?

This word is a tracing paper from the English discount (discount).

In general, this is a very broad concept that applies to various areas of economic life. Here are some examples.

A discount can be called:

• the difference between the nominal and real (the price at which it was sold) value of a debt security;
• differences in prices for consignments of goods delivered at different times;
• the amount or percentage by which the amount of loan payments is reduced in the event of early repayment.

As is easy to understand, this concept is always based on one or another difference in prices, which can arise in a wide variety of situations. This difference can be expressed both in absolute terms (in rubles, dollars) and in relative terms (fractions of a unit or percentage).

Discount when valuing collateral

Here we are primarily interested in the discount, which is included in the rules (public or not) of the bank. His employees use these rules to determine how much money it is profitable to lend to a particular client. In this case, we can call the discount a correction (reducing) factor.

To understand what it is, look at the simple formula:

Where: S is the final loan amount, d is the correction factor, R is the full market value of the property.

Table of correction factors

Here are the most typical discount values ​​for different types of assets.

Of course, different banks have their own scales; somewhere you may be offered slightly more favorable conditions for objective reasons (for example, the bank has a partner involved in the sale of used cars). However, in general, a better rate should make you wary. Just like a coefficient less than 0.4. If you are asked to calculate the loan amount at such a rate, ask to explain why the low coefficient is associated. If there is no reasonable answer, you should probably look for another bank.

What is a discount? Discount is a broad concept that refers to economic activity and translated into English means a discount. In different areas of activity, the discount can have different meanings:

• on the stock exchange, this concept means the difference between the nominal and market value of a bond;
• in banking, this is a reduction in the price of collateral in favor of the bank when applying for a loan;
• in trade, this can mean a discount on goods in case of prolonged delivery times, if the goods do not meet the requirements or are not in great demand, and similar discounts;
• in other areas, this could be any commercially beneficial discount.

In general, a discount is a difference in price that arises due to some circumstances. The discount can be fixed, cumulative, or depend on the quantity of goods purchased. There may also be other factors that influence its size.

When receiving a loan, a collateral is required that will secure it if the borrower does not repay the loan. The discount in this case is the difference between the loan amount and the loan amount.

A discount that differs from the actual price of the collateral is called the collateral coefficient, and often its presence in the conditions for obtaining a loan causes great indignation among borrowers, because in this case the assessment of the value of property owners is not equal to that of the bank.

In this case, the discount acts as insurance for a bank or other financial institution. With it, he reduces the likelihood of not having enough funds to pay off the debt in the event that he has to sell the mortgaged property. In many ways, this practice is associated with a large number of loan defaults and delays.

Moreover, even if an independent appraiser assessed the collateral property at the market price, it is far from a fact that it will be possible to obtain a loan for this amount. Some banks take a deposit only taking into account the discount, and its size is also set by the bank, and sometimes the discount reaches half the cost of the property. This is done so that in the event of non-payment of the debt, the proceeds from the sale of the pledged property can cover not only the loan amount, but also the interest on it, as well as possible legal or similar collection costs. Also, the size of the discount depends on the type of property, how long it has been used and other similar factors.

This system is very convenient for banks, but consumers of loans most often do not like the provision of discounts very much, because by counting on one amount, you can get much less.

The concept of discount that is used in the stock exchange is very similar to that used in the banking industry. In both cases, the borrower is expected to make a profit. The discount provided by the discount is the difference between the selling and market value of the security.

The borrower provides the bond at a price below the market price. When purchasing a security, a purchase and sale agreement is concluded, which states that after a specified time the borrower is obliged to sell the bill at the market price. Thus, he will receive an income that is the difference between buying and selling, and this difference is equal to the amount of the discount.
Moreover, making a profit does not depend in any way on the time of use of the security. If the borrower does not buy it back after a set time, then the lender loses almost nothing; he has every right to sell it to a third party. The only problem is the volatility of prices on the securities market. Bills of exchange may have different prices on different days, but small financial losses are still possible.

In trade, a discount is used when it is necessary to sell stale or seasonal goods. This could also be a marketing ploy. In any case, the seller expects to increase his profits.

Although the product is sold at reduced prices, the seller can attract new customers and make more profit if he sold it without a discount. So, many stores can periodically offer discounts and then return the market price. The buyer, out of habit, will purchase the product even after the price increases.

Also, a discount is a good opportunity to increase interest in a new or previously unclaimed service or product. Stores can hold seasonal sales, for example, in the spring to sell off leftover winter clothes, which also increases revenue. After all, it is better to sell at a low price than not to sell at all.

Also, a discount can be provided both for each unit of goods and through a cumulative system. For example, if the buyer purchased a certain quantity of goods, or purchased for a certain amount, or in the case of a wholesale purchase. The conditions may be different, and the parties agree among themselves.

Discount in everyday life

Let's look at what a discount is using a simple example. The supplier has a product in stock that for some reason was not sold. To ensure that the product does not become stale or if it is seasonal and quickly loses its relevance, the supplier offers it to its customers at a significant discount. This can be observed during the sales season in shopping centers. Most often, such discounts include clothing and shoes, less often household appliances or electronics.

Many chain companies have their own discount stores where their goods are sold at discounted prices. However, they should not be confused with second-hand stores or outlets that sell low-quality goods. This could be a branded store that, before the release of a new collection, sells off the remnants of the old one at a significantly reduced price.

In the modern world, the concept of discount is very widespread and everyone has encountered it in one form or another. Despite the price reduction, this increases sales and attracts new customers.