Professional Documents
Culture Documents
Types of
LOANS
And their
documentation
2
CLASSIFICATION
OF
LOANS
SECURED LOANS
A secured loan is a loan in which the borrower
pledges some asset (e.g. a car or property) as collateral.
UNSECURED LOANS
Unsecured loans dont have asset for collateral. These
loans may be more difficult to get and have higher interest
rates.
OPEN-ENDED LOANS
Open-ended loans are loans that you can borrow over
and over.
CLOSED-ENDED LOANS
Closed-ended loans cannot be borrowed once theyve
been repaid.
Consolidated
Pay Day
Loan
Loan
Term
Business
Loan Loan
Educa Perso
tion nal
Loan Loan
TYPES
Gold
OF
Loan LOANS
Vehicl
Home
e
Loan
Loan
Prope
rty
Loan
Policy
Construction
Loan
Equipment
Loan
9
TERM LOANS
A secured term loan will usually have a lower interest rate than an
unsecured one.
10
Term
Classification
PERSONAL LOAN
CONSOLIDATED LOANS
Protect your credit rating Help you get out of debt faster
14
EDUCATION/STUDENT LOAN
VEHICLE LOAN
Most people today need a loan when they buy a new or
used car. And the high cost of many cars means that
consumers spend years paying for their vehicles.
GOLD LOAN
It is a form of debt financing whereby a potential gold
producer borrows gold from a lending institution, sells the
gold on the open market, uses the cash for mine
development, then pays back the gold from actual mine
production.
POLICY LOAN
A loan issued by an insurance company that uses the cash
value of a person's life insurance policy as collateral.
HOME LOAN
The home loan is a loan advanced to a person to assist in
buying a house or condominium.
BUSINESS LOAN
Character
4C Capacity
Collateral To
Concept
Repay
Capital
25
CHARACTER
Character refers to the financial history of the borrower;
that is, whet kind of "financial citizen" is this person or
business?
Character is most often determined by looking at the
credit history, particularly as it is stated in the credit score
(FICO score).
Factors that will affect the credit score include:
Late payments
Delinquent accounts
Available credit
Total debt
CAPACITY
CAPITAL
COLLATERAL
Collateral is the cash and assets a business owner pledges
to secure a loan.
In addition to having good credit, a proven ability to make
money, and business assets, banks will often require an
owner to pledge his or her own personal assets as security
for the loan.
Banks require collateral because they want the business
owner to suffer if the business fails.
If an owner didn't have to put up any personal assets, he or
she might just walk away from the business failure and let
the bank take what it can from the assets.
Having collateral at risk makes the business owner more
likely to work to keep the business going, as banks reason
it.
Procedure for granting
loans and advances:
(I) FILLING UP OF LOAN APPLICATION FORM
Thank You