AFP Loan Market Data Provides Corporate Loan Benchmarks
The Association for Financial Professionals (AFP) today announced that it has partnered with Thomson Reuters LPC to offer AFP members access to industry-leading information on current conditions in the corporate loan markets for investment grade and leveraged borrowers. The AFP Loan Market Data will be an important resource to finance professionals facing the prospect of negotiating corporate loans in a bank credit market that is still recovering from a historic shakeup.
Arranging a corporate credit facility is never a simple task. Companies seek favorable pricing, maximum credit, and limited financial covenants that might restrict corporate activities or decisions. Lenders, on the other hand, benefit from wider spreads, smaller exposure to each credit, and restrictive covenants that protect their interests. Most CFOs and treasurers are painfully aware that banks also use credit facility negotiation to ask for, or in many cases demand, a greater share of their commercial and investment banking fees.
“With over $2 trillion in corporate loans maturing before the end of 2012, corporate finance executives will be competing for access to a limited pool of available credit,” said Jim Kaitz, AFP President and CEO. “To get the credit they deserve at terms that are competitive for their organizations, CFOs and treasurers need to understand the pricing and terms on similar deals that are currently being executed.”
While most experienced finance executives have learned to play the negotiation game, many are finding that they must play with a new set of rules. They must renegotiate a mountain of corporate credit just as the world is emerging from the greatest banking crisis that any of us has ever experienced. In the upcoming cycle, negotiations will be further complicated by uncertain economic conditions and banks’ understandable protection of their balance sheets.
The AFP Loan Market Data, which is provided by Thomson Reuters LPC and featured in their weekly Gold Sheets publication and LoanConnector online service, provides benchmark pricing for recent investment grade and non-investment grade borrowers. Information available to AFP members includes average loan pricing, tenor, and size for a range of credit ratings, as well as information on the variation in pricing. Through Thomson Reuters LPC, corporate finance executives can subscribe to access more detailed information on the underlying deals that make up the benchmark pricing, as well as extensive analysis of the corporate loan markets.
“Promoting transparency in the syndicated loan market is vitally important to Thomson Reuters LPC. We are thrilled to be working with the AFP to bring timely and valuable loan information directly to the corporate treasurers and finance professionals that need it,” said Mike Lavin, Global Head of Thomson Reuters LPC.
Loan Financing – way of funding activities that would otherwise be impossible
Sometimes in a person’s life, there comes a time when money is tight, or money is needed quickly and that is when many people will turn to the use of loans. Loans are used when someone is borrowing money from an individual or an institution. Loans involve lending money to a person with terms of repayment laid out.
In modern society, a loan is a perfectly acceptable way of funding activities that would otherwise be impossible. Loans are provided to a variety of people for a variety of reasons. It may be that an individual wants a loan or that a company needs a loan; there are few limits. No matter what the purpose of the loan, there will almost certainly be formalities that have to be followed. For example, forms will have to be filled out and legal terms agreed. Very few people are able to borrow money for free. Generally, loans are a business transaction and a cost is placed on the loan.
Being able to borrow money is an opportunity not a right. People take loans for a variety of purposes and in a range of different values. Larger loans are generally available over a longer period of time and with better rates of interest, whereas smaller loans will be repayable over a shorter period of time and with higher rates of interest. These smaller loans are often used to meet a temporary need such as a holiday or to deal with redundancy.
Not everyone goes to the bank when they need a loan. Many loans are given between family members or friends. Even in these circumstances, it is still wise to have a signed agreement to prevent arguments in the future.
One form of loan that almost everyone has to rely upon at one time or another is a mortgage to assist with the purchase of a home. This type of loan requires certain criteria to be met and a financial advisor should be consulted. Terms will vary dramatically, depending on
the duration of the desired loan. Longer term borrowing
such as a mortgage is generally more cost effective than
shorter term borrowing like credit cards.
Students often take out loans to help with their studies.
Education can be expensive and lending institutions offer
many options designed specifically to help students get
through university or graduate school. These loans are
available to help with fees, accommodation and living
expenses. One of the major drawbacks of student loans is
that the loan will become a burden on the student as soon
as they start work and may affect their ability to get
other loans such as mortgages.
A loan may also be considered when someone is looking for a
new car. Companies that sell cars often offer their own
loans as an extra service or money can be borrowed from a
lending institution. Financing a car does not have to
involve a loan and many people prefer to lease a car so
that they can make regular changes.
Loans come in all sorts of sizes with a wide variety of
terms to suit just about any purpose. Most people need a
loan at least once during their life and as such the market
for providing loans has become much larger recently
offering a great choice for consumers.
Due to the nature of modern society there are now a wide
range of loans available for an even wider range of
purposes. At some point in life, the vast majority of
people will need a loan of some type, so shop around and
choose wisely.
Getting Loan Against Home in India or the mortgage of home
Loan against home connotes a loan that is given or disbursed against the mortgage of home, as a certain percentage of market value of the property. Generally, the loan amount that is sanctioned ranges from 40% to 70% of the market value, with a minimum threshold limit of Rs 2 lakh. A loan against home works out to be much cheaper than personal loan. The rate is lower because the lending entity has a security in the form of the housing mortgage vis-à-vis a personal loan that is given without any security.
The tenure for repaying loan against home has an upper limit of 10 years. The loan can be taken for any purpose and the customer is not required to disclose the motive behind the loan, to the lending authority. The criteria for loan against home are same as that of a home loan. Part prepayment as well as full prepayment of the loan is generally allowed by most lending institutions, though with a charge. Loan against property is available in case of both residential and commercial property. Many housing finance companies allow individuals to take loan against home even if they have taken a housing loan from them.
Amount Of Loan Depends Upon
Your income, savings, debt obligations
Cost/value of the property mortgaged
Your repayment track record for other loans, credit cards, etc
Number of years in service/ business
Eligibility Criteria
Salaried Individuals
Minimum Age of Applicant: 21 years
Maximum Age of Applicant at the Time of Loan Maturity: 60 years
Minimum Net Monthly Income: Rs 12,000 per month
Self-employed Individuals
Minimum Age of Applicant: 21 years
Maximum Age of applicant at the Time of Loan Maturity: 65 years
Minimum Annual Income: Rs 1,50,000 per year
Documents Required
Proof of Residence (Copy of Ration Card/ Telephone Bill/ Electricity Bill/ Voters Card)
Proof of Identity – (Copy of Voters Card/ Drivers License/ Employers Card)
Bank Statement / Passbook, for past 6 months (where salary/ income is credited)
Salary Slip for last 3 months, with all deductions
Form 16 for the last 2 years
Copy of all Property Documents
In case of self employed professionals, apart from the above documents, certified financial statement for last 2 years is required
Two passport size photographs
Other Details
Generally, loan processing charge of 2% is levied.
Pre-payment is allowed after 6 months. Generally, prepayment charge equivalent to 4% of the outstanding principal is levied.
In most of the cases, the minimum amount of loan against property is Rs 25,000 and the maximum amount is Rs 1.5 crore (Rs 15 million).
The charges that might apply in case of loan against property are processing fee, pre-payment fee, charges for changing from fixed to floating rate of interest and charges for changing from floating to fixed rate of interest.
Business loans to self employed professionals, firms and corporations
Business loans are available to self employed professionals, firms and corporations, to meet their operating expenses, finance capital expenditure (or acquisition of fixed assets) towards starting or expanding a business. Even industrial units are given business loans, to swap existing high-cost debt from other bank / financial institution. Apart from providing funding, bank can also issue letters of credit or give a guarantee, on behalf of the customer, to the suppliers and even government departments, for the procurement of goods and services on credit.
The maximum amount of business loan that can be sanctioned varies from bank to bank. However, the minimum loan amount is Rs. 25000 and maximum loan tenure is 5 years. Generally, no security is required for business credit up to a certain limit. For business loans above the limit, banks usually require a collateral security or a percentage of business loans as margin, in the form of fixed deposit with the bank. Business loans are similar to an overdraft and are available like a limit on current account. In this case, the interest is charged only on the actual amount utilized, rather the entire amount of loan.
Types of Business Loans
Professional Loans
Professional loans, as their very name suggests, are provided to self employed professionals like Doctor, Chartered Accountant, Interior Decorator, Architect, Company Secretary, etc. Unsecured in nature, this type of loan is not given to manufacturing, trading or processing units. The amount of loan varies between Rs. 25000 to Rs. 25 lakh, considering the age of the applicant, his financial standing, his repayment capacity, tenure of the loan (maximum 5 years), etc.
In case of professional loans, the rate of interest depends upon the prime lending rate, is calculated on diminishing balance and can be on the fixed as well as fluctuating basis. In many cases, it depends upon the customer’s profile and his financial capacity. The payment is made through EMIs and in only a few cases, tangible collateral security is required. Most of the finance companies also charge a process fee, usually 1% of the loan amount.
Documents Required
Proof of Identity (Passport Copy/ Voters ID Card/ Driving License)
Address Proof (Ration Card/ Telephone Bill/ /Electricity Bill/ Passport)
Bank Statements (latest 6 months bank statement /passbook)
Latest ITR, along with computation of income
Balance Sheet & P&L Account for the last 2 yrs, certified by a CA
Qualification Proof of the Highest Professional Degree
Proof of Continuation (Trade license /Establishment /Sales Tax Certificate)
Other Mandatory Documents (Sole Proprietorship – Declaration, Partnership – Copy of Partnership Deed, Apart from Copy of MOA, AOA & Board Resolution)
Two passport size photographs
Trade Loans
Trade loans are provided to traders/ businessmen, so as to help them either open a new business or operate/expand an existing one. The amount of loan varies between Rs. 25000 to Rs. 100 lakh, considering the age of the customer, his financial standing, his repayment capacity, tenure of the loan, etc. The maximum duration for which the loan is given is 5 years and it has to be repaid through Equated Monthly Installments or EMI.
The rate of interest depends upon the prime lending rate and can be offered on the fixed as well as fluctuating basis. There are many banks that require customers to furnish collateral security for the loan, in the form of mortgage of land (not agricultural land) and building. Apart from that, National Savings Certificates, Government Bonds, Bank’s Term Deposits, Assignment of Life Insurance Policies, Approved Shares & Bonds (in the name of borrower/proprietor/partner/director) are also acceptable.
Type of Concerns Given Business Loan
Sole Proprietorships
Partnerships
Private Limited Companies
Documents Required
Sole Proprietorship / Partnership Firm
Proof of Identity (Copy of Sales Tax / VAT /Service Tax / Excise Registration Receipt OR Registration under Shops and Establishment Act OR PAN ID / IT Return of the Concern OR Water / Electricity / Municipal Tax Bill in the Name of the Concern OR MAPIN Card in the Name of the Concern)
Proof of Individual Identity (Copy of Passport/Voter’s Identity Card/Photo PAN Card/Driving License/MAPIN Card)
Proof of Residence Address (Copy of Passport/Voter’s Identity Card/Driving License/Ration Card/Life Insurance Policy/Electricity Bill/Telephone Bill)
PAN Number/Form 60 of the Concern
Financial Documents (Copy of P & L Account and Balance Sheet for last two years, audited by a CA and Copies of IT returns for the last two years)
Bank Statements for last 6 months
Partnership Deed (Required only in case of Partnership Firm)
Proof of Place of Business
Two passport size photographs
Private Limited Company
Proof of Identity (Copy of Sales Tax / VAT /Service Tax / Excise Registration OR Registration under Shops and Establishment Act OR PAN ID / IT Return of the Concern OR Water / Electricity / Municipal Tax Bill in the Name of the Concern OR MAPIN Card in the Name of the Concern)
Memorandum and Articles of Association (Copy of Certificate of Incorporation)
Board Resolution (Copy of Annual Return establishing the shareholding pattern)
Proof of Individual Identity for the authorized signatories and 2 directors, including the managing director (Copy of Passport/Voter’s Identity Card/Photo PAN Card/Driving License/MAPIN Card)
List of Directors
Copy of Form 32 filed with ROC
PAN Card / Form 60 of the Concern
Financial Documents (Copy of P & L and Balance Sheet for last two years, audited by a CA, and Copies of IT returns for the last two years)
Bank Statements for last 6 months
Proof of Place of Business
Two passport size photographs
More Information
Short-term Loans
Used for short-term working capital requirements and paid within 1 year.
Intermediate Loans
Used for new business, to build inventory, buy equipment or increase working capital, and paid between 1 and 3 years.
Long-term Loans
Used for well established business, to increase fixed assets, for related business acquisitions or expansion, and paid between 3 and 5 years. At times, used for start-up business, to purchase land or buildings, fund construction efforts or finance long-term working capital.
Note
Two types of charges might be levied in case of business loan – processing fee and Pre-payment fee. Processing fee is payable at the time of processing of loan application. Pre-payment fee is payable in case you decide to pre-close your loan account, by paying the entire/part of the loan before it is due.
auto loan – check out the various finance schemes available
With a plethora of auto loan opportunities available in India these days, it is now possible for you to buy your dream car within a matter of days. No need to save up money for making complete down payment at the time of buying. Just gather enough amount for the initial payment and pay the rest in easy installments, by taking up a loan. The best part about auto financing is that, apart from the new cars, loans are available for old cars as well.
After you have decided to take an auto loan, check out the various finance schemes available in the market. After undertaking a thorough research of each and every scheme, you will need to pick the one that suits you the most, in terms of interest rate, monthly installments, duration, and so on. The size of the loan will depend upon the cost of the vehicle and its type (standard or premium), along with the percentage financing you want or are being offered.
In case of a new car, up to 90% of cost of the car is finance, while the percentage gets reduced to 80% in case of old car. However, the financiers might have different terms for different models. For example, Maruti 800 has a high resale value. In case the buyer defaults and the finance company has to sell the car, to get back their loan amount, it would be able to get a higher value. Therefore, the finance company may give higher percentage of finance in such a case.
There is no necessity for any collateral to get a car loan. Usually, the bank or finance company hypothecates the car in its name. The endorsement for hypothecation is made in the Registration Certificate (RC) book of the vehicle, which gets cancelled after the loan is repaid. Usually the tenure of auto loan varies from 1 to 5 years. However, there are some banks with schemes that offer loans for 7 years as well.
General Features
In case of a new car, loan amount is up to 90% of cost of the car.
In case of used car, loan amount is up to 80% of the car.
The maximum loan amount is up to 3 times the annual salary (for salaried professionals) or 6 times the annual income (for self employed professionals).
Banks generally offer a preferential treatment to their existing customers. If you have savings or current account with a bank, it is easier to get the loan and you might also get preference in terms of rate of interest.
Loan is given for a period of 1 to 5 years.
If you want to go for an early settlement of the loan amount, certain charges are taken as a penalty.
For the purpose of auto loan, the interest is calculated on compound basis.
There is also a minimum amount of auto loan that you have to take from finance money.
In case you have been declared bankrupt, applied for bankruptcy, defaulted in some loan in the past or a court case pending against you, it will be very difficult for you to get an auto loan.
The rate of interest for an auto loan differs from one bank to the other, while the minimum is somewhere around 10-11 percent.
Eligibility Criteria
Minimum Age of Applicant While Applying For Loan: 21 years
Maximum Age of Applicant at Loan Maturity: 58 years
Minimum Employment: 1 year in current employment and minimum 2 years of employment in general
Minimum Annual Income: Rs 100,000 (net)
Telephone: Must at Residence
Documents Required
Proof of Identity (Copy of Passport, PAN Card, Voters ID Card or Driving License)
Income Proof (Latest salary slip with form 16 – for salaried individuals or IT returns for the last two financial years – for self employed individuals and professionals)
Address Proof (Copy of Ration Card/Driving License/Voters Card/Passport /Telephone Bill/ Electricity Bill/Life Insurance Policy/ Pan Card)
Bank Statement (For the last 6 months)
Two passport size photographs
Home Loans i.e Home Purchase Loans, Home Improvement Loans
Real estate is currently one of the fastest growing sectors in India. Banking sector is also registering profitable business since the last few decades, with the growth of real estate. Majority of the banks are also offering easy home loans at attractive rates to their customers. Now that getting a home loan is so easy, it seems everyone can fulfill his / her long cherished dreams of purchasing lands, building their houses and expanding their homes. Different types of home loans are tailored to suit the heterogeneous requirements of the customers. The description of some of the most common types of home loans is given below.
Types Of Home Loans
Home Purchase Loans: This is the basic home loan for the purchase of a new home.
Home Improvement Loans: These loans are given for implementing repair works and renovations in a home that has already been purchased by you.
Home Construction Loan: This loan is available for the construction of a new home.
Home Extension Loan: This is given for expanding or extending an existing home. For instance, you may apply for a loan for the addition of an extra room in your home and for similar cases.
Home Conversion Loan: This is available for those who have financed the present home with a home loan and wish to purchase and move to another home for which some extra funds are required. Through home conversion loan, the existing loan is transferred to the new home including the extra amount required, eliminating the need of pre-payment of the previous loan.
Land Purchase Loans: This loan is available for purchase of land for both construction and investment purposes.
Bridge Loans: Bridge loans are designed for people who wish to sell the existing home and purchase another one. The bridge loans help finance the new home.
Balance Transfer Loans: Balance transfer loans help to pay off an existing home loan and avail the option of a loan with a lower rate of interest.
Refinance Loans: This loan helps you pay off the debt you have incurred from private sources such as relatives and friends, for the purchase of your present home.
Stamp Duty Loans: This loan is sanctioned to pay the stamp duty amount that needs to be paid on the purchase of property.
Features of Home Loan
Home loans are available on fixed rate of interest as well as floating rate of interest. In fixed rate loans, the interest rate remains fixed over the life of the loan, irrespective of the interest rates in the open market. The plus point of fixed rate loans is that they remain steady over the years, making at least one aspect of your monthly cash flow predictable. However, the flip side is that the lenders charge a higher rate of interest for fixed-rate loans because if interest rates shoot up, they lose the opportunity to make more money on the funds they are lending.
In floating rate loans, the rate of interest changes according to a set formula as interest rates fluctuate in the open market. The plus point is that lenders charge a lower rate for such loans because you are taking on some of the interest-rate risk. The downside is that interest rates may rise anytime and you can end up paying more than fixed rate loans. The type of interest you opt for will entirely depend on your personal preferences.
General Information
The loan amount is based on the repayment capacity of the customer. However, it cannot be more than 85% of the cost of the property (including the cost of the land).
The minimum term of home loan is 5 years, while the maximum duration for the loan is 20 years, subject to the retirement age of the applicant.
Home Loans can be applied either individually or jointly, with spouse, children (son or daughter) and even earning parents (father or mother), but if staying with the applicant and having regular income.
Home loan eligibility can be enhanced by repaying the outstanding loans, clubbing the income, increasing the home loan tenure and opting for a step-up loan.
The amount of loan sanctioned varies from bank to bank. Generally, the maximum loan amount granted for the applicant would be 80% to 85% of the cost of the home.
The eligibility for the applicant depends upon his/her capacity of repayment. It stiffens with the increase in home loan rates.
Processing charge, pre-payment penalties, commitment fees and miscellaneous costs accompany a home loan, in many of the cases.
Providing additional security, like bonds, fixed deposits and LIC policies, or having a guarantor can enhance your eligibility for a home loan.
Eligibility Criteria
The minimum age limit for the person applying for loan is 21 years.
For Government employees and those working at public limited companies, the maximum age limit for applying for home loan is 60 years, while for salaried individuals, it is 58 years.. For self employed people, the maximum age limit is 65 years.
The applicant should be graduate.
The applicant should have a stable source of income, at the time of availing the loan and should have a saving history as well.
Documents Required
Salaried Individuals
Salary slip/Form 16 A
A photocopy of the first and last pages of Ration card or copy of PAN/Telephone/Electricity bills
A photocopy of Investments (FD Certificates, Shares, any fixed asset etc. or any other documents supporting the financial background of the borrower
A photocopy of LIC policies with the latest premium payment receipts (if any).
Two passport size photographs
A photocopy of bank statement for the last six months
Self-Employed/Businessmen
A brief introduction of Business/Profession
Balance Sheet, Profit and Loss account and statement of income with Income Tax returns for the last 3 years, certified by a CA
A photocopy of Advance Tax payments (if applicable)
A photocopy of Registration Certificate of establishment under shops and Establishments Act/Factories Act
A photocopy of Registration Certificate for deduction of Profession Tax (if applicable)
Bank statements of Current and Saving accounts for the last 6 months
A photocopy of Certificate of Practice(if applicable)
A photocopy of any bank loan (if applicable)
A photocopy of the first and last pages of the Ration card or a copy of PAN/Telephone/Electricity Bills
A photocopy of LIC policy (if applicable)
A photocopy of investments (FD Certificates, Shares, any other fixed asset
Two passport size photographs
Why Can’t I Get Approved For a Private Loan?
Ever since the credit crisis hit the student loan industry, it’s gotten harder to get private loan funds. Let’s face it – credit is tight these days. That means that banks are being much more selective in their lending decisions. Without any significant credit or income of their own, college students can experience some difficulty in getting private loans.
If you are in need of private loan funds for college, make sure you know what lenders are looking for in deciding whether to make a private loan to a student:
1.Your Credit
Although you probably don’t have much of a credit history, lenders will always check your credit record to make sure you don’t have any student loan defaults, credit defaults, or serious delinquencies (like on your credit card, for example).
2.Your School
Believe it or not, your school now has an impact on your ability to get a private loan. If your school has a high graduation rate, lenders believe you are more likely to graduate and find a good job, and therefore more likely to be able to pay back your loan. If you are finding that lenders do not work with your school, you need to check with your financial aid office to see if they can point you to a private loan lender who does.
3.Your Co-signer
Perhaps the most important factor in the equation is your co-signer. Lenders are looking for someone to share responsibility for the loan with you, should you not qualify for the loan on your own. That could be a parent, relative or friend who has a good credit history and documentable income. If you are having trouble finding someone to co-sign the loan for you, read our section on Finding a Co-signer.
If you are have applied for a private loan, but were denied due to your co-signer’s credit record, you can always find another co-signer and try again. We know it’s difficult to find someone that wants to have your student loans on their credit report. If a private loan really is your only option, read up on the best ways to approach someone to become your co-signer.
Your school is a great place to start if you are looking for a private loan lender. If you are having difficulty getting approved for a private loan, make sure to keep your financial aid counselor updated. If you can’t get approved for a private loan, you’re going to need to find other options to pay your school bill. Don’t wait to discuss any problems with your financial aid department!
How to get the best alternative loan easier.
What is the best alternative loan? For most students the “best” loan is the one that costs them the least amount of money. In addition, you probably want to have convenient product features that make repaying your alternative loans easier.
Step 1: Research alternative loan lenders & products
The first step to getting the best alternative loan is to do the research and find the product that makes sense for you. Here are some important questions to answer when looking at an alternative loan product:
•What repayment plans do you offer?
•Are payments required in-school or not until I graduate?
•What is the range of fees and interest rates I can expect?
•Do you offer a co-signer release program?
If you don’t know what these questions mean, make sure you read about the basics of alternative student loans before you start looking at lenders that offer these loans.
Step 2: Find a credit-worthy co-signer
Unless you have sufficient income and a good credit history, chances are you will not qualify for an alternative loan without a co-signer. A co-signer can be anyone over 18 who is willing to share the responsibility of the loan with you. We’ve put together some helpful information on finding an alternative student loan co-signer.
A co-signer not only helps you get approved for the loan, they can also lower your interest rates and fees, and increase the amount you can borrow. In summary: the better the co-signer, the more you can borrow to help cover your cost of education and the less you’ll pay.
Step 3: Getting the lowest interest rate and fees
Now that you have 1) selected a lender that has the alternative loan product you want and 2) found someone who is willing to co-sign the loan for you, it’s time to apply. After you complete the application process with your co-signer, and are approved, you will be given your loan terms.
Review the loan terms carefully. The two most obvious things you will want to look at are the interest rate and fees being charged. Remember that alternative loan rates are most likely variable and will likely be calculated based on the Prime Rate or LIBOR plus a margin.
Even though rates are low today, they will fluctuate during the time that you repay your student loans. For example, if the Prime Rate is at 2% today and your margin is Prime + 5%, your rate today is 7%. If the Prime Rate goes up to 6%, your rate will increase to 11%. Make sure that you can afford your student loan payments at either possible scenario.
If the interest rate and fees on your loan are too high, you and your co-signer can try applying with another lender, or you can try applying with another co-signer.
Remember that each time you apply for an alternative loan, your credit will be run and an inquiry will show up on your credit report. Make sure you read as much as you can about alternative loan approval and before you start the application process. Good luck finding the best alternative loan!