Loan Appraisal – Everything You Need To Know

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Loan Appraisal - Everything You Need To Know

Everything You Need To Know About Loan Appraisal.

You may not have heard of loan appraisal, but it is an essential aspect of obtaining a loan from any platform. Loan appraisal refers to assessing a particular loan application or proposal very well to check the loan applicant’s repayment ability. 

Loan appraisal is critical when applying for a loan. If you want to apply for a loan and you don’t have sufficient knowledge of what loan appraisals are, you may not know why your loan application was rejected. 

Overview Of loan Appraisal 

Have you ever applied for a loan and weren’t accepted? And You probably don’t know why this happened. The reason for this is that the loan platform has conducted a loan appraisal to ensure or to check if you are capable of repaying the loan you intended to obtain from the platform. 

The platform does this by checking your creditworthiness score. Your creditworthiness score largely determines whether your loan application process will be accepted. 

If you owe any loan platform before applying for a loan, chances are that your loan will not be accepted. The platform will check the loan appraisal by checking your BVN, which is linked to your bank account. They will access the bank statement of account, enabling them to determine your loan repayment. For instance, if you apply for a loan of one million while after the loan appraisal process, they find out that you cannot repay the loan, and the loan will not be given to you.

What Is a Loan Score? 

Having explained what loan appraisal is all about, it is essential to understand the loan score. To compute the creditworthiness of a borrower, a loan analysis needs to be performed. Apart from checking the loan history of a borrower, a lender will also evaluate their loan score. 

A loan score is a score given to a borrower which depends on their loan history. The high the score, the higher the chances of you getting a loan. 

Everyone has a high loan score on their first borrowing, but when you borrow without paying back as agreed, your loan score will reduce. The more your loan score decreases, the more difficult it is to obtain a loan from any platform. 

This is why it is essential for you only to borrow and choose the repayment options that best suit you. If one is interested in applying for a personal loan, a car loan, or any other loan, one should ensure their loan score is good. In India, the loan score of any loan applicant should ideally be 750 and above.

Factors Evaluated During a loan Appraisal Process

So many factors are evaluated and considered during the loan appraisal process. Some of the factors include the following;

Income:

This is one of the most important factors evaluated during the loan appraisal process. The Platform you wish to obtain a loan from will determine your income. This is to enable the platform access and check if you’re eligible to borrow the amount you intended. If your income range does not match what you wish to borrow, your loan application will not be accepted.

Age:

During the loan appraisal process, your age is checked and evaluated. They do this by comparing the age you provided during your application process to the one recorded in your bank details. If they find differences, chances are that your loan application process will not be accepted.

Work experience:

Work experience is very important when applying for a loan in some loan platforms. You must input your work experience, years of experience, and the office held during the time of work, even the duration. All of these help the loan platform to assess your eligibility.

Present and former loans:

If you owe any former loans platform, we advise you to go and clear the debt. If you don’t and you reapply for a loan, the platform will check it by checking your creditworthiness score, and if your creditworthiness score is low due to the debt you incurred, your loan application process will not be accepted.

Nature of employment:

After you have started your work employment, during the loan appraisal process, the nature of employment will be checked to help the platform understand the type of work you did and the possible monthly salary you earned from the platform.

Assets owned:

The more assets you own, the higher the chances of your loan application getting accepted. During the loan appraisal process, the platform will check if you owe any asset and how much the asset is worth. This will enable the platform to check your eligibility for the loan you wish to apply for.

Frequently Asked Questions 

What are the various methods of loan appraisal?

The first step in Term Loan Appraisal is evaluating the management of a prospective borrower. Technical Feasibility (It is to be analyzed how the project’s technical requirements can be met, Economic Viability, and Financial Viability.

What is the importance of loan appraisal?

Loan appraisal is a necessary process for financial institutions to ensure that as they are handing out funds, the borrower is someone who is creditworthy and can afford to pay back the amount, thereby reducing the financial loss and bad debts that banks face.

What is the appraisal process?

A home appraisal is a process by which a licensed appraiser thoroughly inspects a property to assess its true worth (which isn’t always the same as the listing price). The appraiser will then compile their findings into a report and generate the home’s appraised value.

Conclusion 

We have come to the end of this article. We believe that you have a detailed explanation of what loan appraisal is all about. 

Feel free to share your thoughts in the comments section. We shall respond swiftly.