What is compensation balance?

What is compensation balance?

A compensating balance is a minimum bank account balance that a borrower agrees to maintain with a lender. The purpose of this balance is to reduce the lending cost for the lender, since the lender can invest the cash located in the compensating bank account and keep some or all of the proceeds.

How much loan can I get on 16000 salary?

The maximum loan amount may range between 8 to 10 times your monthly income. Henceforth, you may become eligible for a maximum loan amount of Rs. 1,60,000 which can be repaid in a tenure that is comfortable to you. In case you are looking for a loan at better terms, you may check your eligibility here.

How are compensating balances reported?

Compensating balances are reported as either current or noncurrent with a note in the disclosure statement aboutthe amount that is restricted, with a contractual agreement. When there is no formal written contract, the amount that is restricted is simply disclosed with a note.

What are discount loans?

A discount loan is a mortgage where the buyer has paid extra cash at closing to receive a reduced interest rate. You can get a discount loan by purchasing points. Your discount loan may enable you to save money on interest over the life of the loan, depending on how long you plan to stay in your home.

Are compensating balances considered cash?

Accounting rules for financial reporting require that compensating balances be reported separately from cash balances in the borrowers’ financial statements if the dollar amount of the compensating balance is material.

What do cash equivalents not include?

Cash equivalents include all undeposited negotiable instruments (such as checks), bank drafts, money orders and certain certificates of deposit. IOUs and notes receivable are not included in cash.

What are the proceeds of a discount loan?

The percent of discount charged by the bank is the rate of discount. The amount of money that the borrower gets is the proceeds.

How is loan discount calculated?

Sometimes, a bank will give what is called a discount loan: in this case, interest is deducted at the time the loan is obtained. For example, if we agree to pay a bank $9,000 in 2 years at 6% simple discount, the bank will compute the interest: I = Prt = 9000(0.06)(2) = 1080, then deduct this from the total.

How much loan can I get if my salary is 14000?

Salary of 14000, Am I eligible for Loan? Check here online

Product Salary Min. loan amount
Personal Loan 14000 40000
Home Loan 14000 300000
Car Loan 14000 100000
Credit Card 14000

What is included in cash and cash equivalents?

Cash and cash equivalents refers to the line item on the balance sheet that reports the value of a company’s assets that are cash or can be converted into cash immediately. Cash equivalents include bank accounts and marketable securities such as commercial paper and short-term government bonds.

Does net debt include restricted cash?

Net debt is equal to total debt less cash and cash equivalents. Do not include restricted cash in this calculation. Restricted cash is not often explicitly identified on the balance sheet, but can be estimated as a percent of cash and equivalents depending on the industry, for example.

What is a discount loan?