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What are the factors which affect the buyer to take loan?

In Banking, Finance on June 22, 2012 at 12:56 am

This is the third blog in the series – do read earlier ones Understanding Types of Loan and How Banks Categorized Whom to Give Loan .

In this blog, I will talk about the factors which affect the buyer while he is about to take the loan.

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The first and foremost step in taking a loan is to understand the purpose of loan e.g.: home loan or student loan.  Then think about most suitable loan for the purpose for example should we take home loan by making payment through credit card – it will look most unsuitable method as home loan is long term loan and credit card payment is made after a very short period of time. Then the loan should be according to your income level eg: how much you are in actual capacity to pay monthly for such loans. It should be rather the amount which you are in position to pay with very comfort every month. Then you need to make it adjusted with your future planning eg: repayment in 6 months or 6 years. The next important step would be to take decision on fee and interest you would like to pay under the loan (eg:  Personal loans have high fee and interest rates than home loan). In the last, you need to take information from many banks or financial institution to get the best interest rates and fees. The bank policies for repayment and other conditions also need to be considered.

In short, the major factors which affect the borrower’s decision are purpose of loan, type of loan which is suitable according to purpose of loan, repayment time period of the loan, actual capacity to pay the loan according to income level, adjusted loan according to future planning, fee and interest rates offered by the different banks.

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  1. “This highly developed technical world has also changed the whole scenario of the financial service.”!!

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