NEWS & ADVICE : HOME LOANS
This is how a bank lends money
By Joseph Samson
Print    Email    RSS   

Have you ever wondered how a bank decides how much amount to lend to you?

Ever wondered why is there a different cap on different loans?

Credit appraisal is the step which decides everything. Credit Appraisal is the process by which a lender appraises the creditworthiness of the prospective borrower. It is a very important step in determining the eligibility of a loan borrower for a loan. Every potential borrower has to go through the various stages of a credit appraisal process of the bank, which might include an interview with the bank officials.

However, just like every bank charges different rates for different loans from different customers, in the same way, each bank has its own set criteria that one must satisfy to qualify as a certified borrower of money/assets from the bank. All banks have their own rules to decide the credit worthiness of their borrowers.

As has been mentioned, the eligibility of a borrower for a loan depends on her/his creditworthiness, however, how is that determined?

Creditworthiness of a customer lies in assessing if that customer is liable to repay the loan amount in the stipulated time, or not. Here also, every bank has their own methodology to determine if a borrower is creditworthy or not. It is determined in terms of the norms and standards set by the banks. Being a very crucial step in the sanctioning of a loan, the borrower needs to be very careful in planning his financing modes. However, the borrower alone doesn’t have to do all the hard work. The banks need to be cautious, lest they end up increasing their risk exposure. All banks employ their own unique objective, subjective, financial and non-financial techniques to evaluate the creditworthiness of their customers.

While assessing a customer, the bank needs to know the following information: Incomes of applicants and co-applicants, age of applicants, educational qualifications, profession, experience, additional sources of income, past loan record, family history, employer/business, security of tenure, tax history, assets of applicants and their financing pattern, recurring liabilities, other present and future liabilities and investments (if any). Out of these, the incomes of applicants are the most important criteria to understand and calculate the credit worthiness of the applicants. As stated earlier, the actual norms decided by banks differ greatly. Each has certain norms within which the customer needs to fit in to be eligible for a loan. Based on these parameters, the maximum amount of loan that the bank can sanction and the customer is eligible for is worked out. The broad tools to determine eligibility remain the same for all banks.


Page  | 12 |  
(Comments Posted : 6) Post Your Comments
1. wh0cd369897 generic albendazole viagra without a prescription erythromycin 500 neurontin minocycline sildenafil without a prescription buy avodart buy prozac buy ventolin
PhyllisImaky (Posted: Jan 28, 2017)
2. Greetings to you all! My name is Mr Abdul Majeed, a private and reputable loan lender. I render all kind of loan to individuals with an interest rate of 3% with a repayment length of 1 to 30 years maximum. A lot of people have benefited from my loan offer and it have change their lifestyle positively giving them the opportunity to create their own business.
I render loan such business loan, agricultural loan, education loan, house loan, automobile loan, etc. If you are in need of a loan, kindly fill the borrower form below with your valid details and reply back for more information at abdulmajeedloancompany@gmail.com

Full Name:
Country:
State:
Sex:
Age:
Home Address:
Amount Needed:
Currency Needed:
Loan Duration:
Monthly income:
Phone: Number:
Occupation:
Purpose for Loan:
Website you saw our ads:

Note: All reply should be forwarded only to abdulmajeedloancompany@gmail.com for immediate attention.
Do you need an urgent loan? (Posted: Dec 4, 2015)
3. Do not use all of these Private Money Lender here, there are not legitimate and if they have a free email account tag i.e. yahoo, gmail, hotmail, live etc then they are not legitimate. If they have telephone number with international dialing codes from Nigeria, India, UK, Singapore and France then you have to beware. A legitimate company would have a genuine website, personalized email address/account and based in the country they claim they are. I would recommend anyone looking a a serious/honest loan lender to visit: DAVID HERLEY FINANCE HOME BASED IN THE USA and their reputation speaks louder than others in the industry when it come to obtaining all kinds of loan, mortgage, debt consolidation and Real Estate Loans. Their full website information and contact details are tel no: +1 (321)-323-1809, Website: www.dherleyfinancehome.net or Email: loans@dherleyfinancehome.net located in Orlando, Florida. USA.
Ron Collins (Posted: Dec 17, 2014)
Show All Comments
COMPARE QUICKLY
 Select a product:
 

CALCULATE QUICKLY
 Select a product:
 

EDITORS' PICKS
Home Loans: How to reduce your floating rate
Factors to Evaluate before opting for Home...
Should interest rate only be considered in...
An insight into the era of teaser loans
The home loans interest rate story: The...


Best love spell caster in Africa call +27604039153...
Relationship Failure solutions , Marriage Spell...
Positive thinking Traditional | herbalist-Spell...
PINJORE: CaℒL Giℛℒs In PiNjOrE 09915787550...
PINJORE: CaℒL Giℛℒ In PiNjOrE 09915787550...
how to gate my home loan certificate

NEWS THIS WEEK
Canara Bank earned a profit of 60%. Feb 6, 2015
New Branch of Laxmi Vilas bank at Vijayawada Jan 30, 2015
Home loan EMIs expected to drop down Jan 21, 2015
Corporation Bank received MSME banking excellence award 2014 Jan 19, 2015
Home loan rates set to fall, after reduction in repo rate Jan 16, 2015
News Archive