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CHAPTER 2 CM (Commercial / Industrial Loan (Leasing (Definition - A…
CHAPTER 2 CM
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What is Land
- The surface of the earth and all substances forming that surface
- The earth below the surface and all substance therein
- All vegetables and other natural products whether on or below the surface
- All things attach to the earth or permanently fastened to anything attached to the earth whether on or below the surface
- Land covered by water
Types of land ownership
- Freehold - The ownership is absolute and last indefinitely
- Leasehold - Expires at some date and it will revert back to the owner. Duration of lease cannot exceed 99 years
Characteristic
- Eligibility 18 yrs old & above
- Amount of loan based on the eligibility
- Period of loan is 30-35 yrs Repayment the amount is fixed
- Security by the collateral
- Cost of borrowing include the fee , legal charges & stamp duty
- Advantages
- Have aesthetic value
- Dont need large sum of money
- Peace of mind
- Disadvantages
- Penalty charge for early settlement
- Have lock in period
- Long term commitment
- Is secured loan offered against the security of a house/property which is funded by the bank's loan
Type of retail /
consumer loan
- Personal Loan
Definition - A loan that establishes consumer credit that is granted for personal use, unsecured loan and based on the borrower's integrity and ability to pay
Characteristic
- Its specify loan amount, interest rate and duration of the loan
- Bank charges will be included in repayment amount
- The eligibilities and documentations requirements are minimal
- The agreement would specify the prohibited purpose of the loan
Advantages
- Easily available
- No agent of middleman
- Unsecured loan
- Less processing time
- All purpose loan
- Minimum documents required
Disadvantages
- Strict qualification requirement
- Require credit history
- Risk to the lender
- Sometimes bank require for account opening
Personal Hire Purchase
Characteristic
- Term of charges
- Margin of finance
- Interest on overdue loan
Process
- Hirer pays dealer deposit
- Owner pay dealer cash pricess less deposit
- Dealer deliver goods to owner
- Owner deliver goods to hirer
- Owner hires good to hirer under hire purchase agreement
- Hirer pays installments to owner under HP agreement
- Advantages
- Maximum financing of 90%
- Hirer can opt for early settlement
- Hirer become the owner of the goods once loan settled
- Fast processing & approval
- Disadvantages
- ownership wait until 9 years
- have to pay the Interest rate
- Duration 9 years & may have default & interest will increase