BANK LOANS

Bank loan process

GROUP- 06
Group Members-
ARJUN GUPTA
DEEPAK KUMAR VERMA
GARGI GOVIL
KHUSHI JAIN
CONTENT
INTRODUCTION
PROCEDURE
COMPONENTS OF A LOAN
WHY ARE LOANS USED
TYPES OF LOANS
FUNCTION/WORKING
LOAN POLICIES
PROS/CONS
what is loan ?
-The term loan refers to a type of credit vehicle in which a sum of money is lent to
another party exchange for future repayment of the value or principal amount.

-Loans may be for a specific, one-time amount, or they may be available as an

open-ended line of credit up to a specified limit.

what is bank loan ? Source-Investopedia

-Bank Loan refers to an amount of money loaned at interest by a bank to a

borrower, usually on collateral security, for a certain period of time.

Source-Freepik
 COMPONENTS OF A LOAN

PRINCIPLE LOAN TERM INTEREST RATE Loan Payments

This is the original The amount of time The rate at which the The amount of money that must
amount of money owed be paid every month or week in
amount of money that the borrower
order to satisfy the terms of the
increases, usually
that is being has to repay the loan. Based on the principal,
expressed in terms of
borrowed. loan. loan term, and interest rate, this
an annual percentage can be determined from an
rate (APR). amortization table.
TYPES OF LOAN
Secured loan is a type of loan that
requires you to provide Security i.e.
tangible security properly charged to
the Bank and do not include intangible
securities such as guarantees to the
lender if you want to borrow money

from them.

Unsecured loan does not require you to

.
provide any Tangible security to the lender
when taking a loan from them. An unsecured
loan is a great option for people who need to
borrow money but have no collateral to pledge.
SECURED LOAN
CAR LOAN
These loans are designed to help you finance the purchase of a car. You need to make a
certain percentage of down payment and the lender finances the rest.

HOME LOAN
A home loan can be taken to buy new property or even to renovate your existing home.
The home itself is the collateral in this loan.

GOLD LOAN
A gold loan is a loan that is given against gold that you keep with the lender as collateral.
Once you pay off the loan, you get your gold back. If you default or cannot pay, the lender
may keep the gold to recover their dues.
 UNSECURED
LOAN
PERSONAL LOANS
Personal loans do not require you to provide capital and usually charge a higher rate of interest. Personal
loans can be used for various purposes and there is no restriction on how you spend the money.

EDUCATION LOANS
These loans are used by students to pay for their college fees and finance their living expenses while at
university or college.

MEDICAL BILLS LOAN

A medical loan is a special type of personal loan that’s only used to pay for medical care. Medical loans can
be especially handy if you need to pay for a large healthcare expense.
THE LOAN PROCESS
Step 1: Application of the Home Loan
You must submit a duly filled application along with important documents such as identity proof, address
proof, income proof, etc. You must provide the details in the form and submit photocopies of the property-
related documents for legal and technical assessment.

Step 2: Loan Approval

After you submit the form and the documents, the appraisal process begins. We evaluate your eligibility
based on specific information relating to your income, liabilities, credit score, etc.
At this stage, we conduct a field credit investigation, wherein the representative may call you, or visit your
home/office, to validate the information you provide in the application form.
Based on our assessment, we will determine your loan eligibility.

Step 3: Legal & Technical Verification

You must submit relevant copies of the property-related documents. These include the complete chain of
title documents (in case of a resale property), sale agreement with the builder, NOC (no-objection
certificate), OC (occupancy certificate), and any other document that we may require to verify. We will also
carry out a technical inspection of the property.
Step 4: Home Loan Sanction
After determining your loan eligibility and verifying the legal and technical aspects of the
property, we will communicate the loan amount through a sanction letter. The sanction letter
will contain the following details:
Total sanctioned loan amount.
Home loan Interest rate
Type of interest rate applicable (fixed or floating interest rate)
Loan Tenure
EMI

Step 5: Home Loan Disbursement

After carrying out credit, legal and technical verification, we would require you to submit the
original title documents. Once you submit the said documents and raise a disbursement request,
we will initiate the process of preparing your disbursement cheque. You will need to sign the
loan agreement before the lender hands over the disbursement cheque to you.
 pros

Purchase without liquidity

driver of growth
provides capital for operations
better interest rates
flexibility
accounting and tax advantages
ownership remains with borrower
cash discount
 cons

additional burden on cost of goods

security needs and creditworthiness
partial funding requirement
strict payment schedule
prepayment penalties and charges
interest rate risk/ cost of funds
processing fee
increased compliances
things to remember before
taking bank loan!
The price of the house: the price of the house should
not be more than 5 times your annual income.
The 35/30 rule: lender will ask for your existing
liabilities, as banks generally do not lend an amount on
which the EMI will be more than 45-50 % of your
monthly take- home pay.
Credit score: some banks offer a lower interest rate on
home loans to those borrowers who have high credit
score. as a thumb rule credit score of 750 or more is
considered to be a good credit score.
Opt for a shorter duration: the EMI per lakh, for the
same loan amount, is less for a longer tenure and higher
for a shorter tenure. but the interest burden is just the
reverse.