Free Loans

Complimentary loans

JAK's main objective is to provide its members with interest-free loans. To achieve this, it must achieve interest-free savings. One example of lending: a bank that lends to small businesses.

JAK's case, Ana Carrie's.

Is it possible for a successful banking operation not to calculate interest on its loans? The presentation of the approach is rooted in two visit to the head office in Skövde and many discussions with the passionate JAK co-workers and members, both in Sweden and Ireland. JAK's main goal is to grant interest-free loans to its members.

To achieve this, it must achieve interest-free cost-cutting. The JAK uses a system of "savings points" to offset spending and credit. Considering the choices of either lending without interest or cutting interest, most of us would like to take out a mortgage. Of course JAK cannot borrow without making a contribution, so any member who wants to take out a credit must first make a contribution, and in the course of a life with JAK each member will have spent about as much and for the same amount of space as they used to.

One could almost conceive of JAK permitting its members to lend (interest-free) from their prospective selves. A new JAK member's first move towards an interest-free credit is to make savings and collect savings points. Those are computed from the stored amount by multiplying it by the number of month for which it is stored by multiplying it by a savings factor.

Depending on the kind of saving chosen by the member, this coefficient is lower (approximately 0.7) for a request holding bank from which it is possible to withdraw one' s saving at any moment. Suppose we have a saving coefficient of 0.9, for example1: the saving coefficient differs according to the kind of deposits held and is lower for those deposits where you can withdraw your saving at any moment (about 0.7).

For example 1: Each of these scenario would bring the same savings points. A member can request a credit after a period of at least six and a half years. To lend a euro for one whole week, you have to redeem one savings point. Only the member is responsible for the amount lent and the repayment period, provided that the corresponding savings points are available.

E.g. the admission of 90 (or 9,000 ) consumes as many saving points over one year as the admission of 45 (or 4,500) with refunds distributed over 2 years. Sample 2: A base credit. For example, 3: An alternate base credit that borrows only half as much but pays back over a longer time. Additionally to a base credit that uses already earning saving points, members can request an additional credit with saving points that will be earning in the years to come.

A " allocation factor " (currently 14) is calculated by multiplying the member's actual saving points to calculate the number of points available for an additional credit. Every principal payment contains a saving rate and the structure of the repayments is such that all necessary saving points are obtained when the principal is fully paid back.

As a result, the member has made substantial cost-cutting gains by fully paying back an additional credit. The savings that are achieved through the redemption of a credit are called post-savings, while those that occur prior to the credit are pre-savings. Following reimbursement of the credit, the net amount of the subsequent results of the accumulated deficit shall be available to the beneficiary or, as is often the case, to begin to save for a new credit.

For example 4: A basic credit with an additional credit. Of course no interest is levied on a credit, but members are required to put 6% of the value of the credit on security for the term of the credit, plus a credit charge to meet administrative overhead. JAK members must, as a consequence of this "virtual" state, have an existing banking relationship with another institution, where they can manage their daily finances.

The Members shall remit funds to or from their JAK Base Bank Account to their other JAK Funds via Postgiro, Bankgiro or via the World Wide Web. JAK is hoping to be able to provide its members with a cash payment service for salary cheques and credit/debit cards in the near term with enhancements to JAK's technologies and evolving finance infrastructures.

JAK, like any banking institution, must make sure that loans can and will be paid back. However, unlike most banking systems, JAK's Spar- und Kreditsystem has several distinct characteristics that, taken together, result in an envyably low failure time. Depending on the amount of the requested credit, the amount to be reimbursed and the available points, a credit applicant has a number of different credit limit and credit period available.

Once selected, the credit division within JAK must evaluate the member's capacity to pay back the requested credit. The majority of loans are securitized, either against ownership or with a personally liable person. Credits for up to SEK 37,000 (approximately 4,000) with a maturity of 2-5 years may be unhedged, but are restricted to 5% of JAK's revenue and so excess application must be queued until funding is available.

Most commonly, the borrower refinances a traditional credit granted by a local government to buy a home, followed by buying a motor vehicle and improving the home. Generally, those who can make savings are good contributors when it comes to repaying loans. So the JAK system, where savings must be made before loans are taken out, is ideal for drawing in these frequent depositors.

Furthermore, approximately half of the time after repaying a credit, there is a break-even point at which the Post Savings on Deposit corresponds to the amount of the credit owed, and from this point the credit is fully covered by the member's saving. Only very few JAK loans fall into arrears.

There are many who consider the interest-free approach to finance to be very important, and this joint loan is an important way of promoting good practice. The easiest way a bench picks up a person's life saving and borrows it to another one. Whereas individual depositors can randomly draw their deposits, a large group of depositors will usually be steady and foreseeable.

JAK has made it its business to keep at least 20% of the initial saving in a cash balance or in sovereign debt that can be made available almost immediately. The JAK also promotes the soundness of its depositors by providing a higher saving factor for long-term deposits. A JAK member may select between 6-, 12- and 24-month deposits representing the preannouncement necessary for payment.

On the second point, JAK has a more challenging balance between savings and loans than other banking institutions, as both are closely related by savings points. The majority of individuals make savings with the intent of taking out loans in the near term. A surplus of savings today could indicate that next year's credit market will be too strong.

Apportionment plays a key part in the ratio between saving offer and credit request. Generally, the JAK boards set the allocation factor to mirror the Bank's actual cash position. A larger pooled of surplus economies will increase the allocation factor to motivate members to borrow and mitigate the surplus.

Sadly, the ratio between the allocation factor and credit demands is not so easy for JAK. However, in the shorter run, the rise in the allocation factor may exacerbate the situation, as members choose to raise their savings points in order to borrow more in the longer run.

JAK would have particular problems with a surplus of credit demands. The reduction of the allocation coefficient would probably result in an uproar from members who had prepared finance budgets with a higher coefficient. However, the alternative would be to reject further loans or to create a holding period. Whereas JAK's main role is to conduct interest-free bank business, it is also seen by members as a means of achieving greater business reforms.

Members of the JAK network accumulate points on a JAK bank card and use their money to grant an interest-free credit to a company. Saving is fully assured so that members are not subject to any monetary risks. Whilst of course depositors do not earn interest on their saving, they profit both financially and otherwise from the project's improvement in their own economies and infrastructures.

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