We are all familiar with the term bank loan. People always take loans from banks to complete their various tasks. Many people have successfully implemented their plans with this bank loan.
However, many people are struggling to pay the interest on this bank loan.
So if you are also interested in taking a loan from a bank, it is wise to know the details before taking a loan. In today’s article, we will try to discuss bank loans and how to get a bank loan. So let’s move on to the main topic without delay.
What is a bank loan?
We are all familiar with the term loan. The word loan means to borrow or lend. Each of us often borrows from our family members, friends, or acquaintances for our own needs.
A “bank loan” is when a certain amount of money is taken from the bank subject to certain conditions and has to be repaid with interest after a certain period. If you do not know how to get a bank loan, you should first learn to get a bank loan.
How many types of bank loans, and what are they?
Before you know how to get a bank loan, find out how many types and bank loans are. Bank loans are divided into three types based on terms. E.g.
- Short Term Loan: The term of this loan is usually one year or less than one year. The loan is given based on repayment terms within one year or less than one year.
- Medium Term Loan: In this system, a loan is given based on repayment terms from 1 year to 5 years.
- Long Term Loan: The term of this loan is more than five years. This loan can be repaid over five years.
There are also some general loans. Let’s learn about them;
- Auto Loan / Car Loan: This loan is a loan from a bank for buying a car.
- Home Loan: A loan from a bank to buy any property or apartment or build a house.
- Personal Loan: A loan taken for family or any individual purpose.
- Business loan: A loan that is given for business.
- Education or Student Loan: The loan given to students for their studies.
- Expatriate loan: This loan is issued for going abroad.
- Agricultural Loan: This loan is issued for agricultural work.
- Quick loan: A loan that is taken in case of emergency. E.g., Natural disasters, marriages of close relatives or when someone in the family is ill, etc.
What is the purpose of a bank loan?
- Home construction
- To buy a car
- For any personal work
- For treatment
- To run the cost of tuition
- For business
- For agriculture
- To go abroad
- Etc. for immediate help in any disaster.
Easy way to get a loan
The way to get a bank loan is not very complicated. However, you may get into trouble when you take a bank loan without knowing it well.
Even if you make a mistake, the process of getting your loan can be costly. Or your bank loan application may be rejected.
So let’s find out the ways to get a bank loan;
Determine the requirements
What is the reason you want to take a loan in the beginning? Determining the subject.
That is, for what purpose do you want to take a loan? Select that category.
Suppose you are willing to take a loan to buy a car. Then you can take an auto loan.
Suppose again, and you want to take a loan to buy farming equipment. In this case, you can take an agricultural loan.
If you can decide in which category you will take a loan in advance, it will be easier for you to get a loan, and the cost of getting a loan will be much lower.
Remember, many people waste money after taking a loan without using it properly. So before you take a loan, you determine your needs and spend according to the plan after getting the loan.
Take a loan from any institution.
After determining the loan category, you have to decide from which institution you will take a loan. Not all banks offer all types of loans.
Even if it is given again, it does not provide a loan on easy terms in all cases.
Some banks offer loans on easy terms for business. Again some banks give loans on easy terms for agricultural work.
So it would help if you chose the bank based on your category in advance.
In addition to banks, some institutions offer loans. However, it would be better to take a loan from a bank than those institutions.
Know the interest rate and processing cost of the loan well before taking a loan. Repeat checks to see if there are any hidden costs.
The lower the processing cost and interest rate, the better. It is not better to take a loan with high interest and additional processing costs.
Apart from banks, many financial institutions also provide loans for various purposes. Among them are Lanka-Bangla Finance, Bangladesh House Building Finance Corporation, IDLC, etc.
Stay away from banks that offer loans at high-interest rates. However, all public and private banks in Bangladesh are regulated by Bangladesh Bank’s Regulations and Guidelines. Follow this link to know the regulations and guidelines of Bangladesh Bank.
Conditions for getting a bank loan
Find out the conditions under which a bank or any other institution gives a loan. Only apply for a bank loan if you can afford it.
The size of the installment
Find out in the beginning how much to pay per month. The measurement of EMI (Equated Monthly Installment) depends on the loan amount and interest rate.
You can find out the EMI online by knowing the loan amount and interest rate.
However, the EMI should not be more than your income. Then this loan will hurt your life. Remember again, and if the EOMI is low, you will have to grind the loan for a long time.
You will need some documents to get a loan from the bank. These documents must be submitted for a loan when you are applying.
Let’s find out the documents required to get a bank loan;
- The application form has to be duly filled and signed.
- Photograph/photograph of the applicant.
- National Identity Card.
- Office ID.
- Visiting card
- Salary Certificate / Pay Slip.
- Copy of T&T / mobile phone / gas bill / utility bill etc.
- Copy of TIN or income tax return.
- Check sheet.
- Copy of valid passport / driving license / other
- Bank statement (minimum six months)
- Other bank loan approval letter (sanction letter)
- Other income proof documents
- Summary of trade license/share capital
- Memorandum of partnership organization and article of association/partnership agreement
- Lease agreement/ownership documents
- Rent / Other Income Inspection Report
- If there are other documents
- Guarantor’s photograph, national identity card, office ID, visiting card.
- Car quotes
- Car details
- Vehicle registration
- Vehicle insurance
What is the interest rate?
According to Section 45 of the Banking Companies Act, 1991, the maximum interest rate on all types of investments and loans is 9 percent. However, credit cards are not covered.
Any bank will be able to set an interest rate of less than 9 percent based on competition. However, the amount of interest can not take more than 9 percent.
However, if the customer defaults, an additional 2 percent interest can be added. In other words, in case of customer default, the loan interest rate will increase to 11 percent.
Remember, Bangladesh Bank sets the interest rate. For some reason, the bank cannot charge you more interest than this. So before taking a loan, you must check it from the website of Bangladesh Bank.
What is kept as security?
Banks accept salable-cashable or good collateral from borrowers to ensure their safety against lending to customers.
In return for the loan, the bank accepts financial obligations (e.g., money deposited in the bank or efficiently convertible financial assets) as collateral, followed by immovable property (e.g., land, house, flat, building, etc.).
Charges are made on the security of the bank to establish the rights of the deposit. If for any reason, the borrower is reluctant or fails to repay the loan, the loan money is recovered by selling the mortgaged security.
However, many banks offer easy loans. In this case, no security is required.
Bank loan facility
Many new entrepreneurs are not able to start work due to a lack of sufficient capital. In this case, the bank loans a new entrepreneur with the necessary means to begin his career.
Then we can say that this bank loan is allowing the unemployed to become self-reliant. Again, many business people are doing different things with loans from this bank.
As a result, the economic development of the country is being organized.
Then we can say;
- Bank loans provide employment opportunities.
- Reduces the unemployment rate.
- It helps people become self-reliant.
- Grants to the economic development of the country.
Disadvantages of bank loans
Everything but there are some difficulties. Similarly, there are some difficulties in the case of bank loans.
In the case of a bank loan, a fixed time is fixed. If anyone is unable to repay the loan at that time, he has to face adverse problems.
Again, interest is charged on every loan. It is often seen that you have to eat Himshim to meet this interest.
Bank loans through credit cards very quickly.
You can easily take a loan within the credit card limit without fulfilling any conditions. But keep in mind that credit card loans mean higher interest rates, and you may have to pay hefty compound interest if you can’t repay the loan on time.
This is my blog about credit card disadvantages, from which you can find out:
- What is a credit card?
- How can you get a credit card?
- Credit card interest rates
- You will continue to learn all the new terms of the credit card gradually after receiving the card.
Bank loan from a religious point of view
We are all engaged in various activities to make a living. Some do jobs, some are entrepreneurs, and some do business.
But to do this business but capital is needed later. Many people take loans from banks to provide this capital. Many people take out loans from banks to build houses or for any other work.
However, we all know that if you take a loan from a bank, interest is charged against the loan.
Now the question is, is it permissible to take a loan from these banks? Or is there a provision to do business with a loan from a bank?
Just as usury is forbidden in Islam, so is usury.
In the hadith, the Prophet said;
The Messenger of Allah, may Allah bless him and grant him peace, cursed the usurer, the usurer, the usurer, and the witnesses over him, and said, “They are all equal.” (Musnad Ahmad 3609).
Since interest is associated with bank loans, it is never acceptable from an Islamic point of view.
What to do if cheated by any bank?
Since all the banks providing services in Bangladesh are controlled by Bangladesh Bank, if you think your bank is cheating on you, you should first complain to your bank. If your bank does not solve your complaint, you can complain to Bangladesh Bank on 16236.
Or go to this link and submit your complaint in writing. I hope you get justice.
Or you can download the CIPC-Customers Interest Protection Center apps from the Google Play Store and complain there.
As many banks in Bangladesh
There is no shortage of banks in our country, both domestic and foreign. From this link, you can see the list of all the banks served in Bangladesh.
Nowadays, people resort to loans for any problem or to start any work. There are many public-private banks or some institutions in Bangladesh that provide loans.
However, before taking a loan, you must know all the details of the loan. Why not take a loan from a bank or an institution?