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


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lord lugard (Posted: Sep 22, 2017)
2. L\\\'étape la plus simple pour devenir membre à part entière de la grande confrérie d\\\'Illuminati. Êtes-vous un homme d\\\'affaires ou un artiste, des politiciens et vous voulez devenir grand, puissant et célèbre dans le monde, rejoignez-nous pour devenir l\\\'un de nos membres officiels aujourd\\\'hui. on vous donnera une chance idéale de visiter les lieux et son pays après que les inscriptions sont complétées par vous, aucun sacrifice ou la vie humaine nécessaire, la fraternité Illuminati apporte de la richesse et célèbre dans la vie, vous avez un accès complet pour éradiquer la pauvreté loin de votre vie à présent. Alors, contactez Grand Master .Via: brotherhoodilluminati701@gmail.com, Rejoignez-nous aujourd\\\'hui et réalisez vos rêves et vos aspirations
lord lugard (Posted: Sep 22, 2017)
3. L\'étape la plus simple pour devenir membre à part entière de la grande confrérie d\'Illuminati. Êtes-vous un homme d\'affaires ou un artiste, des politiciens et vous voulez devenir grand, puissant et célèbre dans le monde, rejoignez-nous pour devenir l\'un de nos membres officiels aujourd\'hui. on vous donnera une chance idéale de visiter les lieux et son pays après que les inscriptions sont complétées par vous, aucun sacrifice ou la vie humaine nécessaire, la fraternité Illuminati apporte de la richesse et célèbre dans la vie, vous avez un accès complet pour éradiquer la pauvreté loin de votre vie à présent. Alors, contactez Grand Master .Via: brotherhoodilluminati701@gmail.com, Rejoignez-nous aujourd\'hui et réalisez vos rêves et vos aspirations
lord lugard (Posted: Sep 22, 2017)
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