The largest single source of bank income depends on the amount of its loans. • Loans and deposits complement each other, as the amount of loans a bank could extend will depend largely on its ability to attract and retain large deposits. • The earning capacity of a bank will be enhanced when it has a large available loanable fund.
As to purpose • Commercial • Agricultural • Industrial • Personal If the proceeds are diverted by the borrower other than the purpose applied for, the bank reserves the right to accelerate the loan’s maturity and call for its payment at once.
As to maturity • Short term • Medium term (intermediate) • Long term Callor demand loans are those which are payable upon call or demand of the lending institution.
As to security • Secured • Unsecured (character loan/clean loan) Unsecured loans may require a co-maker. In some cases even secured loans may also require a co-maker.
As to method of payment • Self-liquidating • Non-self-liquidating Self-liquidating loans are easier to pay.
As to method of release • Installment • Lump Sum Sometimes, the installment release is resorted to in order to control use of the proceeds.
As to source • Bank Credit • Mercantile Credit • Private Credit • Public Credit Sometimes, the installment release is resorted to in order to control use of the proceeds.
Commercial Loan • A debt-based funding arrangement that a business can set up with a financial institution. The proceeds of commercial loans may be used to fund large capital expenditures and/or operations that a business may otherwise be unable to afford. www.investopedia.com
Industrial Loans • granted to finance the establishment, rehabilitation, development, expansion and operation of industrial projects, enterprises engaged in the purchase, processing and transformation of raw materials, manufacture of goods, as well as the marketing thereof, including the purchase of industrial machinery, equipment and implements used or to be used therein, and loans granted to Participating Financial Institutions (PFIs). www.nscb.gov.ph
Consumer Loan • loan made by the lender to a person which is payable in installment for which a finance charge is or may be imposed. This term includes credit transactions pursuant to an open-end-credit plan other than a seller credit card. RA#7394
Based on the latest central bank data, the residential real estate loans continue to dominate consumer loans. As of end-December, the total residential real estate loans amounted to P320.450 billion, up 21.14 percent year-on-year.
BSP noted that figures suggest a notable increase in the purchase or rent of residences near business districts by young professionals, of luxury homes (condominiums) by high-income expatriates, and of real estate properties for the use or investment by overseas Filipinos.
Other consumer loans such as automotive loans and credit card receivables also showed growth last year. Auto loans totaled P186.323 billion, 16.54 percent more over 2012 numbers. Credit card loans, in the meantime, rose 5.85 percent to P157.394 billion.
Loanable Amount • Minimum loan amount of P500,000 • Up to 80% of appraised value of property Interest Rate • Prevailing rate at the time of loan release; fixed for 1 year to 5 years at the borrower's option, subject to review thereafter Purpose and Maximum Term of Loan • Lot Purchase - 15 years • Purchase of house and lot, townhouse, condominium - 20 years • House construction and improvement - 20 years
Personal Loans • Personal loans are used for paying immediate needs like tuition fees, debt consolidation and to some buy gadgets. Like most loans, a personal loan bears an interest rate agreed upon by two parties, the lender and the borrower. Interest Rates for Personal Loans in the Philippines vary per lender, and are usually quoted on a monthly basis.