CONSUNER/PERSONAL LOANS

Personal loans can be opted for, for various reasons such as personal holidaying, paying for higher
education fee, wedding expenses, buying a car, or buying a real estate property.

Since so many lenders in the market are offering personal loans these days, it is always good to
compare and survey the market. Also, with various offers and schemes available, it is always a wise
decision to shop around the market and compare to choose the best of what is being offered.

Applying for Personal loans is a very simple and easy process. Lots of lenders, land based and online,
offer different personal loans today. At TheLoanBazaar.com, all you have to do while applying for a
loan is to visit our website and click on the suitable loan option, and directly apply for the Loan
money_you_require.

There are basically two types of Personal loans available, which are:

1.Secured personal loans
2.Unsecured



How to appIy for a Consumer/PersonaI Ioan
How banks process consumer loan applications
s it easy to get a personal loan? Well, yes and no.

On the one hand, there is less paperwork, since the bank does not have to verify any asset as in
the case of home loans. On the other hand, there are stringent income criteria to qualify
for personal loans. But once you make the grade it takes only about three days for you to get a
personal loan -a lot less time than a home or car loan.
So, here goes a step-by-step break-up of the personal loan application process:

Step 1: Enquiry with a financier:
The first step is to get in touch with a lender. How do you know whom you should approach? You
need to get in touch with as many lenders as possible and get them to make loan offers to you.
Then negotiate with them to get the best interest rate. Check if there are any special offers.
After you have got all the banks to make their offers to you, select your lender based on the
information you have in front of you.

Step 2: Documents CoIIection
After you finalise your lender, the lender's direct selling agent will visit you and collect documents
supporting proof of income, residence proof, and identity. You may be required to produce copies
of T returns, salary slips, bank statements, ration card, passport, driving licence, and other
relevant documents. These requirements vary from lender to lender.

Step 3: FieId Investigation Agency Representative Visit
After submitting the documents, a field investigator will visit your home to double check the facts
provided in the documents, such as your place of residence, tenure at work place and so on. t is
essential that you are present during this visit; otherwise the investigator could report that the
facts you provided do not actually add up, thus forcing the lender to reject your loan application.

Step 4: Loan approved
Once the lender is satisfied with the veracity of your documents, the loan is approved. The lender
then disburses the amount through cheques or demand drafts (DD).


Documentation
Documentation needed for personal loan
Compared to other types of loans, personal loansrequire you to produce the least number of
documents. The necessary documents required can be classified into three: documents
supporting your identity, your residence and your income.

Identity Proof:
A copy of any of your passport or driving license, voters D, PAN card, credit card with
photograph, or employee D card with photograph. Any one of the above documents with your
photograph is proof that you are the same person as you profess to be.

Proof of Residence:
A copy of your passport, ration card, or voters D if you reside at the same place as entered in
the above-mentioned documents. f you are staying as a tenant on rent, in a place different from
where you have been issued the ration card, passport, or voters D, you can produce utility bills
(electricity or telephone) of the place as proof of residence.



Income Proof:

The proof of income for salaried individuals differs from that of self-employed individuals.
Salaried people need to submit their latest salary slip, Form 16 for the last financial year, and
their bank statement for the last 6 months. Self-employed people need to provide their T returns
for the last 2 years, balance sheet, and profit & loss account as proof of income.










Commercial/Business Loans

.; is . business lo.n?


A business loan is a type of bank loan which is offered to finance businesses. This loan has to be repaid by a
particular date with a specific amount of interest. The rate of interest on the business loan to be offered to the
borrower is dependent on a number of factors which include the following:
1. The creditworthiness of the borrower
2. The amount of loan
3. The repayment term or period
4. The collateral provided against the loan
The credit situation of a borrower is analyzed by the lenders before offering a loan to him. This procedure is
known as credit analysis. Lenders use it to gauge the repayment capacity of the borrower.

'7es of business lo.ns

Civen below are the different types of business loans that are available to the business owners:
1. Term loans
2. Lines of credit
3. Equipment loans
4. Seasonal loans
S. Factoring
6. Credit card advances
7. Acquisition loans
8. 7idge Loan
3. ebt Consolidation Loans
10. evelopment Loans
11. ezzanine Loan
12. #efinancing Loan

.; .9e ;e documen;s ;.; ou need ;o fu9nis fo9 secu9ing . business lo.n?


To apply for business loan procedure, you must complete and submit a loan application along with few
documents. After review of your credit report and income status, underwriting process is undertaken. After all
conditions are satisfied, loan committee gives its final approval. The documents required to furnish are:
1. A comprehensive business plan, consisting of an outline of the market and clientele of your business
2. Collateral for receiving the loan
3. Business and personal financial statements
4. !ncorporation or LLC documents (if needed)
S. Credit references and tax returns
6. Proof of proprietorship or sale if the business was acquired by you
7. Naterial contracts/agreements (if necessary)





CommercIuI oun ProcessIng

Applying for a Loan
Lenders basically pre-qualify potential borrowers by assessing their background and capacity to pay. The
process starts by initial gathering of background and personal information such as purpose for the loan, your
income and existing debts. To formalize and commence the loan process, you must then fill-up and complete a
loan application form.
Requirements to Expect
Take note of the documentary requirements that will go with your loan application. This may require some
consideration and time to gather. A business loan for example, may require a business profile that gives a
general background of your business. n addition, a business plan that clearly describes how your business will
be run and how it is projected to perform financially will be required.
Standard requirements for different loan types will include personal financial statements listing all personal
assets, liabilities, as well as your personal tax return for the past three years. Another fundamental requirement is
collateral. Collateral for a loan may include assets such as real estate and stocks or bonds, hard goods such as
equipment, and other personal assets and guarantees. This is meant to give the lender some guarantee that you
will be committed to seeing your loan repaid. t also offers assurance that should you fail to meet your loan
obligations, they can recover from your assets the money that they have lent out.
Processing Your Application
A loan officer will review your application and documentary attachments. Your loan officer will review your credit
reports, collateral documentation, as well as your income information. Some additional documentation may be
requested in order to support the information in your loan application so that all details may be properly assessed
and verified.
Loan Underwriting
Once all documentary attachments are deemed satisfactory, your loan application will then be submitted to a loan
underwriter or a loan committee. They will review, assess, and eventually decide whether your loan will be
approved.
At this time a processor will present you with a letter of intent or term sheet for signing. This document includes
the amount of financing, terms of payment, type of security or collateral, and other key terms. The decision to
approve or reject is usually made within five days. Expect some requests for you to provide additional
documentation during this underwriting process.
You will be required to sign the letter of intent and along with it, you may be asked to give a check to serve as a
deposit, and to pay for some third-party reports used in the underwriting process such as appraisals.
Finally Getting Your Loan
Once all the conditions and requirements are satisfied, the loan application package is resubmitted to the loan
committee for final approval. Upon loan approval, you will be required to sign the final loan documents. f you
have a closing agent (an attorney or escrow company representative for example), they will receive the closing
documents and coordinate the signing of all necessary papers. They will also coordinate the transfer of funds,
record the deed transfer and mortgage, and order title insurance.
With all requirements met and all closing documents in order, your loan can finally be released! This can be done
in several ways - electronic wire transfer to your designated account, or issuance of a cashier's check or draft in
your name.








The 4 C's of Credit for Business Loans

anks look ca7efully at bo77owe7s, if you a7e a business owne7 with poo7 pe7sonal c7edit, you may
be thinking that co7po7ate c7edit is simply unavailable to you.
This is not t7ue! In fact, the p7ocess of establishing good business c7edit may even help you
imp7ove you7 pe7sonal c7edit because you will have a bette7 unde7standing of how c7edit lending
wo7ks.

In the c7edit wo7ld, the7e is whats known as the "Fou7 Cs of C7edit-fou7 things banks look at to
dete7mine you7 c7editwo7thiness. These "Fou7 Cs apply to individuals and to businesses, and they
a7e:

Character
Cha7acte7 is that when a bank judges you7 businesss cha7acte7, it is looking at you7 size include;
O Location
O ea7s in business
O umbe7 of employees
O $tock pe7fo7mance
ou will need at least 4 t7ade 7efe7ences to obtain a business FICO sco7e , facto7s that will affect
you7 c7edit sco7e include:
O Late payments
O elinquent accounts
O Available c7edit
O Total debt
This is why it is ve7y impo7tant that as a business you have a physical add7ess, a business phone,
answe7ed p7ofessionally du7ing business hou7s, and a business license (if you7 state 7equi7es one).

Capacity
Capacity is about you7 business that assesses the ability to pay bills. A bank conside7s capacity
including examining past c7edit histo7ies as well as cash flows and the type of p7evious dept
secu7ed o7 unsecu7ed. The7efo7e it is vital that as a business owne7 you have been paying all you7
c7edit bills on time. A late payment on a c7edit bill is a ma7k against you7 business that is not
easily 7emoved.

Capital
Capital 7efe7s to the capital assets of the business. Capital assets might includes machine7y and
equipment fo7 a manufactu7ing company, as well as p7oduct invento7y, o7 7estau7ant fixtu7e. ank
conside7 capital, but with some hesitation, because if you7 business folds, they a7e left with assets
that have dep7eciated and they must find someplace to sell these assets, at liquidation value. ou
can see why, to a bank, cash is the best asset.

Collateral
Collate7al is cash and assets a business owne7 pledges to secu7e a loan. In addition to having good
c7edit, a p7oven ability to make money, and business assets, bank will often 7equi7e an owne7 to
pledge his o7 he7 own pe7sonal assets as secu7ity fo7 the loan.. anks 7equi7e collate7al because
they want the business owne7 to suffe7 if the business fails. If an owne7 didnt have to put up any
pe7sonal assets, he o7 she might just walk away f7om the business failu7e and let the bank take
what it can f7om the assets. Having collate7al at 7isk makes the business owne7 mo7e likely to
wo7k to keep the business going, as banks 7eason it.

As you can see, the old saying that "banks only loan money to people who don't need it" is
basically true. In order to get a business loan, you will need to:
O ave an excellent credit rating
O e able to prove your business will generate revenues to pay the bank loan
O $how that the business assets have value in case they need to be sold to pay oII the bank,
and
O !ledge your own assets in case the business Iails.




%HE "7 C's" OF EX%ENDING CREDI%

n business you will rarely come upon a more important task than that of determining
the creditworthiness of your patrons. Poor credit decisions inevitably lead to the
demise of your business. When you extend credit to customers, you are providing
them a "cash loan" equal to the amount of their purchase. So use the same
guidelines bankers use when determining loan creditworthiness. These guidelines
can be easily remembered as "The Seven C's of Credit."
Character. You must be comfortable with the borrower's integrity and confidence in
his willingness to repay you. Have you met the customer? What is his reputation in
the community? s he an upstanding guy or is he a dead beat? You may consider
checking references with other business-owners with which the customer does
business.
Credit History. No financial institution would ever loan money to an applicant
without first checking his or her credit history. As a potential creditor, you also have
the legal right to obtain the borrower's credit report and examine it in determining
whether or not you can risk extending the credit. Always tell the customer you will be
checking his credit report and get written permission before actually doing so.
Career History. Ask about the borrower's business. s it a successful business
venture? Has he been in it for a while? Has he had failed business ventures in the
past? His past successes or failures may be determinative of his future business
success.
Capacity. n what capacity is your credit going to be used in his business? s it part
of his inventory? Will the use of your goods enable him to generate sufficient funds
to repay you and any other creditors? You may consider going over his inventory
records with him. The faster he moves his inventory, the more likely his business is a
success. And the more likely he will be coming back to order from you again soon.
CapitaI. What is the borrower's financial net worth? A customer with a positive net
worth can survive low cash flow times in his business and still pay your invoices.
CoIIateraI. You may consider extending only "secured credit." This usually means
having the customer pledge real estate or his inventory on a UCC in exchange for
your providing the credit. f he defaults on the loan, you get the pledged property.
Just make sure the property hasn't been pledged before, or you'll have to get in line
if the customer defaults.
Conditions. Always make sure the conditions of the sale are clear and in writing,
signed by the borrower. This includes payment dates and amounts. f he defaults on
any of the conditions, your collection efforts will go much more smoothly if the
conditions of the credit are clear.
Once you have "sailed through" The Seven C's to determine the creditworthiness of
your customer, be sure to consider this last bonus "C" before making your final
decision:
CoIIections. Bear in mind your own receivables. f your cash flow isn't what it needs
to be, you may not be able to afford extending more credit at this time. Remember
that your customers' overdue accounts with you significantly impact
your 43 company's creditworthiness.