The permanent loan: Loan is not a gift!

The permanent loan is a very interesting topic in many ways. Who owns the works of art in museums? What are the obligations associated with it? Lawyer Korina Perry provides information in the art law blog.

 

Why a permanent loan?

Why a permanent loan?

“The art is long! And our life is short!” This saying of Goethe’s created character in the world-famous play Faust aptly describes why works of art are permanently lent to a third party, be it a museum or a gallery.

In order to clarify the interests of a permanent loan in contrast to the short-term loan of a work of art, one has to deal with the participants.

Works of art have their price. Most museums use state funding. There is often a lack of collections or works of art to display changing exhibitions. The purchase or purchase of collections or individual works of art can be a financial problem.

Art wants to be seen; she wants you to deal with it and forms the basis for discussion. The best way to do this is to create a space in which the discussion can unfold publicly.

 

What is a permanent loan in legal terms?

permanent loan in legal terms?

The permanent loan is a legal term, but it is not found anywhere in the law. It is used today to make it clear that the lender leaves the time of return open when the artwork is handed over to a third party. The lender, however, always remains the owner of the artwork and can request it back from the hirer.

 

What are the special features of a permanent loan?

permanent loan

The basis of the permanent loan is a loan contract.

When the term long-term loan is legally fulfilled has not yet been precisely defined. It is generally recognized that this is a long-term loan, the end of which is deliberately kept open between the parties. In principle, the distributor can reclaim the artwork at any time.

As with all contracts, the so-called principle of private autonomy also applies to long-term loans. After that, everything can be agreed, unless the law prohibits it. Taking into account the interests of those involved in long-term loans is therefore always a question of the individual case and requires careful and deliberate design of the underlying contracts, in the best case by a specialist.

If you have any questions about the subject of art law, please contact us. The Perry & Partner law firm will be happy to help you!

Cheap loan for civil servants – read here

 

Because of their secure income, civil servants are given more favorable terms when lending than other workers. A cheap loan for civil servants is characterized above all by low interest rates and long terms.

This results in moderate monthly installments for the borrower even with larger loan amounts. A cheap loan is offered to officials from various banks and insurance companies.

What is a cheap loan for civil servants?

What is a cheap loan for civil servants?

In addition to civil servants, such a loan can also be given to employees who have been in the public service for a long time. Depending on the provider, loan amounts between USD 10,000 and USD 100,000 are offered. The amount of credit that is possible depends on the monthly income of the borrower.

The long terms of between 12 and 20 years are particularly advantageous. The interest rates are significantly lower than for comparable loans. For most providers, this depends on the amount of credit required and the term chosen. The loan is paid out for free use. However, no further loans may exist in addition to the official loan.

Anyone who has already taken out a loan must repay it with the official loan.

How is a cheap official loan repaid?

How is a cheap official loan repaid?

 

The official loan is repaid through a life insurance policy. The sum insured and the term of the life insurance correspond to the official loan. While the interest is paid monthly to the lending provider, the repayment is made via the life insurance contributions.

As soon as the term of the life insurance has ended, the loan is repaid in full in one sum. In the event that surplus shares are incurred during the term of the life insurance, these are paid out to the borrower.

Advantages of an official loan

Advantages of an official loan

 

In addition to the favorable conditions and the low monthly installment, a cheap loan for civil servants has a number of other advantages. The borrower and his family are fully covered for the entire term by taking out life insurance. A further life insurance or a residual debt insurance is therefore not required for the loan.

Upon request, the borrower can take out an insurance against invalidity. This secures the loan in the event of illness or incapacity to work. When the insured event occurs, the insurance covers the monthly installments or the outstanding loan amount.

No processing fees are charged for the official loan. In addition, borrowers can install a discount on most providers on request. This allows the amount of monthly payments to be reduced even further.

Of course, the payment can also be made 100 percent on request. Of course, the chance to receive attractive surplus shares is also an advantage. These are paid in full to the borrower at the end of the term.

Risk of total failure P2P credit platform

The risk of a total failure of a P2P platform should not be underestimated, but also not overestimated! Nobody can judge exactly how high this is. On the one hand, P2P loans are still in their infancy (compared to traditional investments such as stocks, funds and the like), and on the other hand, I am not aware of a total default.

What happens in the event of a total failure?

money cash

Nobody can say this with 100% certainty due to the lack of precedents. You can find out what such a worst-case scenario looks like with the respective provider in the FAQ directory of the platform or through a specific request from the support. It is usually the case that the P2P platform transmits the so-called “loan book” to a notary at regular intervals. In the event of bankruptcy, the latter is then responsible for processing the outstanding loans. In theory, this sounds plausible to me, but in the worst case I would have to take care of it myself. Realistically speaking, the latter is almost impossible.

How can I protect myself from a total failure?

money cash

You cannot protect yourself directly from it, as you have no personal influence on it. However, you can minimize your risk if you observe the following points:

 

  • Diversification as the top priority! Spread your total investment across multiple P2P platforms / providers and loan initiators. One should also think about a diversification into different economic areas (Western Europe / Eastern Europe, various countries).
  • Read financial reports! If these are made available, you should read them into them and follow them for years. A possible total loss can be recognized early on in the balance sheets.
  • Watch statistics! Every provider makes statistics available to investors somewhere on the homepage. Observe growth rates in credit volume, number of investors and also default rates.
  • Establishing the market: The trend is that the longer a provider is established on the market, the less likely it is that there will be a sudden total failure.

My personal assessment

Basically, I think a sudden total failure of a P2P loan platform is relatively unlikely. Rather, I think it is a realistic scenario that some providers will clearly stand out from the competition and others will gradually disappear from their meaning. Here too the old adage applies: “Whoever does not go with the times goes with the times”. In my opinion, there is currently a huge change in the direction of “P2P Loans 2.0”.

The original idea of ​​social lending seems to be falling behind more and more.

Many investors want pre-financed loans, repurchase guarantees / collateral, small minimum investment amounts, no fees etc. – to name just a few points. I don’t exempt myself from it. This is probably the reason why the Eastern European P2P platforms find this enormous popularity. The development of Smava can be seen as an even more extreme example. Smava was one of the pioneers in the German social lending sector in 2007 and sees itself today mainly as a comparison portal for installment loans. P2P loans are now only a minimal “secondary branch”. How the development continues – we will see!.