| LOAN-NOT
A DREAM ANYMORE
Loan-A step towards achieving a desired goal or a dream
We have many dreams and ambitions. It may relate to our professional or our personal life. It can be a starting of new business venture or putting up a production unit or it can be building or renovating a home. We require money for fulfilling all these desires and ambitions. We are having required money sometimes, but many a times, we don’t have. It is in this situation that we think of obtaining a loan. Loans made easy, if one wishes to understand in the simplest sense, is the money borrowed. We can get loan from various banks, non-banking finance companies, other financial institutions or our relatives.
A rising trend
One can either provide the security for obtaining loan or not. If security is provided, it is called secured loan otherwise it is called unsecured loan. Since after obtaining the loan, one can easily go to utilize it for the desired purpose, there is no need to first save the required amount and then invest. In the past, people had been reluctant in taking loan for some reason or the other. Obtaining a Loans made easy has become quite popular now days. It has forced various institutions to make their loan procedure very simple and easy one. They are now chalking out various ways in which loan can be provided to the borrower in a comfortable manner and that too in a very short period of time.
Availability of loans through various institutions
Various institutions for their loan products are now making advertisements. They are now employing DSA’s i.e. direct selling agents, whose job is to meet the prospective borrowers right at their homes. They gather all the information required and complete all the necessary formalities at the residence of the borrower only and get the loan sanctioned as per rules. Unlike few years back, now the borrower does not have to visit the loan providing organization many times regarding the completion of the required formalities and providing various types of documents to them. It is because of this attitude and strategy of the financial institutions that borrowing a loan in now not a tedious process as it was earlier.
Various institutions are providing information about their loan products linked to annual percentage rates (APR). It tells about the total payment, the borrower has to make. So it obviously includes all the interest charged in the loan account as well as all other additional charges/fees. Thus it definitely provides a bird’s eye view to the prospective borrower and he can see whether he can repay the loan in the given time frame or not. This facility also prevents the loan account going bad and thus becoming a non-performing asset respectively as borrower can know in advance about the amount he has to repay and when.
The rate of interest applied depends upon the type of loan. The rate of interest applied is lower if the loan is secured one. It is higher in the case of unsecured loan. This is because in the case of secured loan, the lender can realize the unpaid amount by selling the security provided. In the case of unsecured loan, the rate of interest charged is higher as there is no guarantee of borrower making the scheduled payment and it definitely affects the recycling of funds of the lending institution. A borrower can thus obtain loan at lower rate of interest by providing the security or at higher rate of interest if he doesn’t have the required security or doesn’t want to provide.
Various institutions are using scoring models for various loan products. It helps lending institutions to ascertain whether the borrower will be able to repay the loan amount or not. Persons who score less than the prescribed level are disqualified. So it becomes easy for the borrowers as well as lenders to find out whether the loan proposal will materialize or not in a very less time.
Now a days, most of the financial institutions are offering on-line application form. A person who wants to take loan from a particular institution can apply online for the loan. The borrower fills the form in no time as these forms are very precise and meticulously chalked out. When the form is completely filled and applied, executives of the concerned institution visits him at his home completes all the required formalities and obtains all the necessary documents. This latest facility has encouraged people in high numbers to avail themselves of the loan, especially in the urban areas. It has made the orthodox way of getting loan by visiting the institution and filling the form there go obsolete.
From the above discussion it seems that online application, APR’s ,scoring model etc has made obtaining loans made easy. It seems quite true also but there is one more thing. Various financial institutions are providing loan products that are meant for a particular segment of people like self-employed, professionals etc. These are specially designed to cater to the needs of a particular segment only. It helps the borrowers to get a proper amount to loan and also helps the lending institution to ensure that the loan provided is correctly utilized.
Documentation is an important part of loan procedure and we cannot ignore it. In the past, major bottleneck in getting a loan from an institution was various types of documents and returns one had to submit before taking a loan. This had made the whole procedure cumbersome. The borrower used to visit the institution again and again in order to get formalities completed. But now, a document called Loan Checklist Application is already attached with the application and when a person is called for or visited, for completing the necessary formalities, he has all the documents required in his basket. There are also some institutions which does not ask for documents. These loan are meant mostly for the persons whose income cannot be determined precisely like self employed persons, waiters etc., as these persons receive their income mostly in the form of commissions etc. But the borrowers have to make large down payments and also have to pay higher rate of interest.
Despite ‘loan application checklist’, there is one more thing that draws our attention and that is the website of the financial institutions. These websites provides all the information required regarding the various type of documents that have to be submitted while taking loan. Thus a person can complete and gather all the required documents before approaching the institution for loan and it helps him to save his time in a great manner. Even some of these documents can easily be downloaded.
Though it is the major technological developments and policy of liberalization that has made the procedure of obtaining loan borrower friendly, but one aspect requires to be discussed here. There is a positive change that has taken place in the attitude of the employees of the lending institutions, banks etc. It has encouraged the people to think positively towards obtaining a loan. This attitude may have arisen out of competition or improvement in the work culture, but whatever may be the case, this has definitely help the persons who wish to take a loan from a financial institution. The employees of these institutions now try to serve their customers in the best possible manner.
It can thus be said that now it is loans made easyto get a loan and all the factors discussed above are responsible for the positive change that has taken place.
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