Professional Documents
Culture Documents
a Benjamin Zhimomi
Sources of loans
Commercial banks Savings institutions Finance companies Credit unions Some automobile manufacturers Friends Family members
Maturity Collateral
Loan Contract
A contract that specifies the terms of a loan, as agreed to by the borrower and the lender
Know Your Customer (KYC) Amount of the loan Interest rate Tenure
Top of Form
No
Month/year
Payment Due (Rs.) 4992.41 4992.41 4992.41 4992.41 4992.41 4992.41 4992.41 4992.41 4992.41 4992.41 4992.41 4992.41 4992.41 4992.41
Interest (Rs.)
Principal (Rs.)
1 2 3 4 5 6 7 8 9 10 11 12 13 14
Oct-2012 Nov-2012 Dec-2012 Jan-2013 Feb-2013 Mar-2013 Apr-2013 May-2013 Jun-2013 Jul-2013 Aug-2013 Sep-2013 Oct-2013 Nov-2013
1500.00 1447.61 1394.44 1340.47 1285.69 1230.09 1173.66 1116.38 1058.24 999.22 939.33 878.53 816.82 754.19
3492.41 3544.80 3597.97 3651.94 3706.72 3762.32 3818.75 3876.03 3934.17 3993.19 4053.08 4113.88 4175.59 4238.22
96507.59 92962.79 89364.83 85712.89 82006.17 78243.85 74425.10 70549.07 66614.89 62621.71 58568.62 54454.74 50279.15 46040.93
15
16 17
Dec-2013
Jan-2014 Feb-2014
4992.41
4992.41 4992.41
690.61
626.09 560.59
4301.80
4366.32 4431.82
41739.13
37372.81 32940.99
Maturity
Life or duration of the loan EMI INTEREST
LOW
INTEREST
HIGH
EMI
Collateral
Assets of a borrower that back a secured loan in the event that the borrower defaults Secured Loan: A loan that is backed or secured by collateral which could be repossessed if the lender defaulted on the loan Unsecured loan: a loan that is not backed by collateral
Sl.No Interest
1 2 3 4 5 6 7 8 9 10 13.50% 13.50% 13.50% 13.50% 13.50% 13.50% 13.50% 13.50% 13.50% 13.50%
Amount Paid Amount after EMI Towards Interest 1,125.00 1,111.77 1,098.39 1,084.87 1,071.19 1,057.35 1,043.36 1,029.21 1,014.91 1,000.44 98,824.11 97,634.99 96,432.49 95,216.47 93,986.77 92,743.23 91,485.70 90,214.02 88,928.04 87,627.59
Loan Eligibility
Fixed Obligation to Income Ratio (FOIR) 45-50% of monthly income Average Banking balance Bank Account Requirements Average Loan Eligibility: (Gross Monthly Income - Gross
monthly income * 45-50% all other obligations) / EMI
Interest 18.25% 13 20 %
Benefits ROI, EMI less, Top up, can apply for OD and CC , no prepayment charges Existing Bank customers, no prepayment penalty, wealth management service, funding HL or OD Existing Bank customers, no prepayment penalty, ask for Rs. 25 30 k salary slab Existing Bank customers, ask for min.1 Rs.5 k salary slab Easy process, credit card and loan, provide loan on phone, salary slab Rs.25 30 k. Easy processing.
HDFC
13-19 %
2 -3.5 %
AXIS
15-19 %
2 -3.5 % 2-3.5 %
CITI BANK 16 %
HDBFS
16 24%
2.5 3 %
(All figures in INR) Total Prepayme Processi Prepayme Amount nt ng Fee nt Charges Paid Amount
BANKS
EMI
SBI ICICI
18.25% 16.00%
0.00% 2.25%
48 48
2951 2834
0 2250
141628 138283
0.00% 5.00%
0 5000
HDFC
AXIS CitiBank HDBFS
16.25%
16.00% 15.00% 17.00%
2%
2% 2% 2%
48
48 48 48
2847
2834 2783 2886
2000
2000 2000 2000
138649
138033 135588 140504
4.00%
0.00% 3.00% 4.00%
4000
0 3000 4000
90% of loans sanctioned are to individuals with a credit score of 700 and higher!
Balloon Payment
It is an payment due at the end of a loan, because the entire loan amount is not amortized over the life of the loan, the remaining balance is due as a final repayment to the lender.
It can occur within a fixed-rate or adjustable-rate. Borrower must be aware of refinancing risk or the risk that the loan may reset at a higher interest rate.
Step Up Loan
It is a kind of loan given by the bank/financial