If you are considering joining a consortium, you should be looking for a lot of information about it, right? In this case, one aspect that needs to be known is the correction in the letter of credit and hence its installments.
The idea is that the participant can maintain their purchasing power at the moment of their contemplation. Thus, it is possible to acquire the good according to its adjusted value.
But how does it work and what exactly does this correction consist of? This is what we will present in this article. So follow up and get access to more information!
What is the letter of credit?
When you buy a consortium, you define the purpose of the acquisition (or category), for example, a property or vehicle. Next, you set the value of your consortium quota, for example, $ 100,000 to purchase a property. For this amount is given the name of letter of credit, which may be the total or part of a given good. From the letter of credit, you can buy a property or a car, for example – according to the category chosen at the time of contracting the service.
Access to the letter of credit may be by lot or bid. At the end of the plan, if the participant is not drawn, he will receive his letter when paying off all the consortium installments.
This does not mean that you will receive the money in hand. Payment of the purchased good is made by the administrator directly to the seller. She makes the transaction after the recipient informs the good that you want to buy within the chosen segment / category and meets the requirements for the release of credit.
What is the correction in the letter of credit?
Participation in the consortium requires the purchase of a quota, which represents a number. Linked to it is a certain value, which is equivalent to the good to be bought (in whole or in part).
Due to this adjustment, the value of the installment is also corrected.
The client will have the credit corrected at the time of its contemplation, but the adjustment of the installments will occur throughout the term of the plan. This is because the group will continue to need resources for other non-contemplated members. At this point it is worth remembering that the consortium functions as the shared economy, in which everyone has a common fund and has the same rights and duties.
How is this process done?
As we have seen, the real estate consortium usually adjusts annually on the group’s birthday, according to the INCC, but may occur in another period, depending on each manager. The consortium of vehicles can be readjusted monthly, especially when the adjustment is used according to the automaker. This readjustment information must be included in the contract.
This practice is regulated by the Lightlife Bank, through Circular 3432, and has all the rules defined in contract with the administrator.
Keep in mind that this is a benefit to the consortium member who ensures their purchasing power.
To better understand the readjustment, imagine the following situation for a real estate consortium: the duration is 150 months, and the value of the letter of credit is $ 400,000. The administration fee is 17% and the reserve fund 2%. Thus, the first installment was $ 3173.33.
With a readjustment of 8%, for example, the value of the letter of credit goes to $ 432 thousand. Therefore, one year later, the installment (credit + fees) is adjusted to $ 3427.20.
Remember that these values are just an example.
How to use the letter of credit?
As soon as the customer gets a share, he joins a group. From this it is integrated into the system and payment of installments begins.
Generally, the draw is held monthly, as is the bid. Some administrators work with sweepstakes by the Federal Lottery or hold meetings online.
Already in the bid, the idea is to offer a percentage of the total value of the letter of credit. Generally, those who bid the highest percentage bid are entitled to contemplation or participate in a special draw in the event of a tie.
Thus, readjustment of the letter of credit is a way of ensuring that the consortium member has the concrete possibility to acquire his property from the purchasing power. If this feature were nonexistent, there could be a significant lag.
Result is the ability to make a secure purchase
Equivalent to an investment and without paying interest – as we saw earlier, there is a charge for administration, reserve fund and, in some cases, insurance (as set out in the contract with the administrator). Correction in the letter of credit is also another instrument that guarantees the consortium member the possibility of making a good deal. Always remember to consult the rules with a responsible manager and your group’s current contract.