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Loan Product Features Using 7 Bank Examples. Comparison of Product Features.

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Presentation on theme: "Loan Product Features Using 7 Bank Examples. Comparison of Product Features."— Presentation transcript:

1 Loan Product Features Using 7 Bank Examples

2 Comparison of Product Features

3 Client Eligibility Criteria No. of years in operation LicensesResidencyAge Bank 1At least 1 yr Resident of either of 3 specific towns for the last 3 years 25 – 60 Bank 2Last 2 years Resident of town where branch is located for the last 3 years 21 – 60 Bank 3At least 1 year Resident of the same barangay for at least 3 years 21 – 60 Bank 4At least 1 year Resident of the same barangay for at least 3 years 21 – 65 Bank 5At least 2 years LGU and DTI Resident of the branch area for at least 3 years 18 – 60 and in good health Bank 6At least 1 year Preferably with LGU and DTI licenses Resident of the same barangay for at least 3 years 21 – 65 and in good health Bank 7At least 2 years LGU license Resident of the same barangay for at least 1 year and must own house and lot and in good health

4 Client Eligibility Criteria IDBusiness LocationCo-Maker Bank 1Has some form of ID Within the geographic coverage of MFUMust be willing to get 2 Co-makers Bank 2Has some form of ID Within the geographic coverage of MFUMust be willing to get 2 Co-makers Bank 3Has some form of ID ( SSS, GSIS, Drivers License, Voters ID, Business Permit Within priority areas of MFUMust be willing to get 2 Co-makers Bank 4Has some form of ID ( SSS, GSIS, Drivers License, Voters ID, Business Permit Within priority areas of MFUMust be willing to get 2 Co-makers Bank 5Has some form of ID Within the geographic coverage of MFUMust be willing to get 2 Co-makers Bank 6Has some form of ID Within the geographic coverage of MFUMust be willing to get 2 Co-makers Bank 7Has some form of ID Within the geographic coverage of MFUMust be willing to get 2 Co-makers

5 Client Eligibility Criteria Others LoansCash Flow Bank 1Must have no outstanding loan and past due record Prioritize those with daily/weekly sales Bank 2Must have no outstanding loan and past due record Business must generate daily/weekly sales Bank 3Those with outstanding loans may qualify if they dont have past due record Must pass CI and Cash Flow analysis Bank 4Those with outstanding loans may qualify if they dont have past due record Must pass CI and Cash Flow analysis Bank 5Those with outstanding loan with 5-6 operators must finish paying their loans before they can qualify to borrow from MFU Business must generate daily/weekly sales Bank 6Preferably without loans from other sources, formal or informal Business must generate daily/weekly sales Bank 7Those with outstanding loans may qualify if their loans are current. Business must generate daily/weekly sales

6 Loan Size MinimumMaximum Bank 1Php 3,000.00Php 25, Bank 2Php 3,000.00Php 60, Bank 3Php 2,000.00Php 50, Bank 4Php 3,000.00Php 100, Bank 5Php 3,000.00Php 50, Bank 6Php 3,000.00Php 75, Bank 7Php 3,000.00Php 100,000.00

7 Interest and Other Charges InterestService ChargeOthers Bank 1 3% fixed per month, add-on 3%Processing Fee = P50; Notarial = P50; Insurance Bank 2 3% per month flat 2.5% of loan amountNotarial fee = P100; Insurance = % of loan, depending on loan term; GRT=5% of interest payable Bank 3 2.5% per month flat, add-on 3%, deducted upfrontInsurance = 0.4 – 1.3% of loan, depending on loan term Bank 4 3.5% per month flat, add-on 5%, deducted upfrontInsurance; Notarial fee = P100; P25 Miscellaneous (e.g cost of forms used) Bank 5 2.5% per month flat 3% of loan proceeds for 3 mos.; 5% for 6-month loan, deducted upfront Insurance = P13/P1000 loan; Notarial fee = P100 Bank 6 2% per month, add-on 2% of loan amount for 2- 3 months; 4% for 4-6 months Notarial Fee Bank 7 2.5% per month, add-on 0.83% per month, add- on Insurance; pre-deducted

8 Penalties for late payment Penalties Bank 1 P20/day missed Bank 2 P20/ day missed, or P100/week overdue Bank 3 6% of delayed installment/day, for daily amortizations ; 6% of delayed installment/week, for weekly amortizations Bank 4 P5/day, for daily amortizations P5/week, for weekly amortizations Bank 5 P500/missed payment + 5% of the late amortization, if 3 days past due Bank 6 5% of loan amortization Bank 7 100% of the amortization amount of every missed payment

9 Savings Contribution / Contractual Savings Savings Bank 1 5% of principal upon loan release 10% of each loan amortization; contractual Clients not allowed to withdraw from the savings account until loan is fully paid Bank 2 5% of loan amount upon release 10% of each loan amortization; contractual Bank 3 Initial deposit of P100 At least 10% of each loan amortization; contractual Clients not allowed to withdraw from the savings account until loan is fully paid Bank 4 Initial deposit of P100 At least 10% of each loan amortization; contractual Clients not allowed to withdraw from the savings account until loan is fully paid Bank 5 10% of loan amount, add-on Bank 6 10% of loan amount, add-on Bank 7 5% of loan amount, add-on

10 Loan Term Term Bank 12 – 6 months Bank 21 – 12 months Bank 31 – 6 months Bank 42 – 6 months Bank 52 – 6 months Bank 62 – 6 months Bank 71 – 6 months

11 Payment Frequency Term Bank 1Daily / Weekly Bank 2Daily / Weekly Bank 3Daily / Weekly Bank 4Daily / Weekly Bank 5Daily / Weekly Bank 6Weekly Bank 7Daily / Weekly

12 Guarantee / Security Term Bank 1 Spouse/relative as co-borrower Two Co-Makers Deed of Assignment of deposit account/Authority to debit Chattel Mortgage (for loans above P15,000.00) Insurance Bank 2 Spouse/relative as co-borrower Two Co-Makers Chattel Mortgage Pledge of deposits Insurance coverage Bank 3 For loans below P25,000.00: Spouses signature as co-applicant Two Co-Makers Deed of Assignment of Deposit Account Security Agreement (in the vernacular) For loans over P25,000.00: Spouses signature as co-applicant Chattel Mortgage Deed of Assignment on deposit account

13 Guarantee / Security Term Bank 4 For loans below P20,000 Spouses signature as co-applicant Two co-makers Deed of assignment of deposit account Security agreement (in the vernacular) For loans over P20,000 but less than P50,000 Spouses signature as co-applicant Chattel mortgage Deed of assignment of deposit account For loans greater than P50,000 Spouses signature as co-applicant REM Deed of assignment of deposit account

14 Guarantee / Security Term Bank 5 For P3,000 to P5,000 loans Spouses signature as co-borrower Must have one co-maker Insurance coverage For loans greater than P5,000 but less than P40,000 Spouses signature as co-borrower Must have one co-maker Insurance coverage Security agreement or chattel mortgage on at least one of the following: serialized assets, equipment, vehicle, inventory Deed of assignment of deposit account For loans P40,000 up to P50,000: Hard collateral

15 Guarantee / Security Term Bank 6 Must have a spouse/relative as co-borrower Two co-makers Insurance coverage Security Agreement Deed of assignment of savings Chattel mortgage, on a case-to-case basis, as determined by top management

16 Guarantee / Security Term Bank 7 For loans below P5,000 Spouse/relative as co-borrower Two co-makers Security agreement Insurance For loans over P5,000 but less than P50,000 Spouse/relative as co-borrower Two co-makers Security Agreement Insurance For loans over P50,000 Spouse/relative as co-borrower Two co-makers Insurance Hard collateral For loans P40,000 up to P50,000: Hard collateral

17 Client Incentives Bank 1 Clients with perfect repayment can avail themselves of bigger repeat loans, based on adjusted repayment capacity rate (ARCR) and cash flow, with fast loan release of one day Bank 2 Clients with perfect repayment can avail themselves of bigger repeat loans, based on ARCR and cash flow, with fast loan release of one day. Bank 3 Speedy access to subsequent loans; Larger subsequent loans Bank 4 Speedy access to subsequent loans; Larger subsequent loans Bank 5 Based on ARCR and cash flow, a client may get bigger repeat loans and/or longer maturity period, with fast loan release of within 1-3 days. Clients shall be informed that they cannot qualify for a repeat loan if more than 10% of their payments on their current loan are not on time. Bank 6 Clients with perfect repayment can avail themselves of bigger repeat loans, based on ARCR and cash flow. Bank 7 Clients with perfect repayment can avail themselves of bigger repeat loans, based on ARCR and cash flow, with fast loan release of one day.

18 Client Orientation

19 Loan Approval Process Bank 1 Loan application must pass the MF Credit Committee. The Credit Committee meets at least once a week. Bank 2 Loan application must pass MF Credit Committee. The Credit Committee meets at least once a week. Bank 3 Loan application must pass the MF Credit Committee. However, the Credit Committee composed of the branch manager and the MFU staff, is responsible merely for evaluating loan applications for recommendation to the Credit Management Director who has the sole authority to approve or deny loan applications up to P150,000. Credit Committee meets twice a week.

20 Loan Approval Process Bank 4 Loan application must pass the mini Credit Committee. The Credit Committee, composed of the banks VP and Head of Operations, a Board member, and the MFU staff, meets once a week to evaluate applications. Bank 5 Loans are approved by the Credit Committee at the branch level. Bank 6 Loan applications must pass mini Credit Committee. The Credit Committee meets weekly. Bank 7 Loan application must pass the mini Credit Committee. The Credit Committee meets weekly


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