Secured Personal Loan


A.    Secured Personal Loan:

Sometimes we need some urgent financial requirement to meet any emergency cash needs. Secured personal loan is a financial product by which you may meet your urgent financial need against your encashable security without encashing your high yield investments. Borrowers may enjoy this loan facilities within very shortest period time.


A secured personal loan is a loan backed by encashable securities you own as collateral — that can be used as payment to the lender if you are unable to pay back the loan. Lenders accept collateral against a secured loan to incentivize borrowers to repay the loan on time. On most of the cases, borrowers enjoy lower interest rates, as they present a lower risk to lenders.


B.    Purpose:

Secured personal loan is a multipurpose loan that can avail to meet any personal financial requirement, such as:

-  Household purchase;

-  House renovation;

-  Marriage;

-  Education;

-  Medical treatment;

-  Debt consolidation;

-  Domestic or foreign travel;

-  Purchase of consumer durables;

-  Other financial need;


C.    Benefits:

Quick processing time;

Higher enjoyable limit;

Flexible enjoyable tenure;

Low processing fees & charges;

Flexible repayment schedule;

No personal guarantor required;

Minimum documentation;


D.    Some Basic & Common Features of Secured Personal Loan:

Now a days, various Bank and NBFI’s are offering most attractive features for the consumers, who wants to avail the secured personal loan facilities. Following are some basic and common features of secured personal loan offered by most of the Bank and NBFI that need to be kept in mind:


       (a)   Who can avail?

              Any Bangladeshi earning individual with stable source of income.


       (b)   Age Limit

              Most of the Bank and NBFI’s are referring following age limits for the consumers.

              -  Minimum Age     :  21 Years;

              -  Maximum Age    :  65 Years (at the end of loan tenure);


       (c)   Professional Experience

Required professional experiences are varies based on consumer profession. Most of the Bank and NBFI’s are referring following professional experience limits for the consumers.

              -  Salaried             :  Confirmed employee having minimum 1 year of work experience with current employer;

              -  Professional       :  Having 1 years of professional experience;

              -  Businessman     :  Minimum 2 years of business experience in same business;


       (d)   Minimum Monthly Income

Required minimum monthly income level are varies based on consumer profession or source of income. Most of the Bank and NBFI’s are referring following minimum monthly income level for the consumers.

              -  Salaried             : BDT 15,000

              -  Professional       : BDT 25,000

              -  Businessman     : BDT 30,000

              -  Landlord             : BDT 30,000

              -  Others               : BDT 35,000


       (e)   Interest Rates

All Banks are currently offering 9.00% or below interest rate for secured personal loan product. NBFI’s also offering secured personal loan product against little bit higher interest rates with additional key features.


       (f)    Fees and Charges Related to Secured Personal Loan

Apart from interest charges, some additional charges may also be applicable to a secured personal loan. Some of the most common charges & fees that should be kept in mind are as follows:

              -  Processing fee;

              -  Stamp duty;

              -  Late payment fee;

              -  Early settlement fee;

              -  Partial payment charges;

              -  Other fees & charges;


       (g)   Loan Tenure

              Most of the Bank and NBFI’s are offering following loan tenure for the consumers.

              -  Minimum       :  12 Months

              -  Maximum      :  60 Months


       (h)   Loan Limit

Most of the Bank and NBFI’s are offering minimum 01 lac to maximum 500 lacs or highest 90% of collateral value.


       (i)    Disbursal Time

Most of the Bank and NBFI’s are completing the total procedure within 5 working days.


       (j)    Collateral

              Secured personal loan is a secured loan product. Following encashable securities is considered as collateral.

              -  FDR;

              -  DPS;

              -  Bank Deposit;

              -  Shonchoypotro;

              -  Bond;

              -  Debenture;

              -  Other encashable securities;


       (k)   Repayment Mode

Flexible repayment polity through Equal Monthly Installments (EMIs) over a period of 12 months to 60 months.


E.    Secured Personal Loan Interest Rate and Calculating Method:

Interest rate refers to the rate at which interest is applicable on any amount borrowed from a Bank or NBFI. Secured personal loan interest rate is one of the most important factors that determine selection of a loan offer. Thus, one should always compare interest rates from multiple lenders before settling on a loan offer.


(a)   Interest Rates

In our country, secured personal loan interest rate set on fixed rate basis. In this case, the rate of interest remains constant throughout the loan tenure. Consequently, monthly EMI amount also remains fixed throughout the loan repayment period. This may help you plan your monthly expenditure in the long term.


(b)   Calculating Method (Monthly EMI)

In our country secured personal loan interest calculation follows reducing balance method. In this method, as you pay off your monthly EMIs, parts of the loan amount and the interest component are paid off. Thus, the principal loan amount keeps on decreasing with time. In this method, interest is calculated on this decreasing loan amount and not the total amount initially borrowed.


F.    Factors Affecting on Secured Personal Loan Eligibility:

Secured personal loan eligibility depends on many more factors. Most of the Bank and NBFI’s are considering following eligibility factors before approving any secured personal loan application.


Monthly net income level;

Current profession category;

-  Employment status (if salaried);

Professional experience;

Monthly expenses;

Other loan burden (if any);

Banking relationship;


G.    Things to Consider before Applying for a Secured Personal Loan:

Before applying for a secured personal loan, consumers should consider following things.

Interest rate;

Loan tenure;

Loan limit;

Processing time;

Fees & charges;

Required documents;

Compare all financers rates & features;


H.    How to Improve Your Chances of Availing a Secured Personal Loan:

As secured personal loan is a secured loan product, lenders have a pre-decided set of rules (credit policies). Many loan applications get rejected as the borrower do not fulfil the basic set of rules of lenders for approval of the secured personal loan. Hence, the borrower works on improving his or her chances of availing a secured personal loan using some simple tips.

Maintain professional stability;

Maintain stable income source,

Maintain clean past loan records;

Identify options for bad credit loans;

Identify the right lender for you;

Avoid multiple credit cards;

Include all your sources of income;

Be honest and provide accurate information;

Avoid multiple loan applications simultaneously;

Provide all required documents as of lenders requirement;

Apply for a loan amount based on your repayment capacity;

Try to keep a gap of minimum 6 months between two loan applications;


G.    Required Documents:

To apply for secured personal loan there are various types of documents are required. Proper documentation the only possible way to avail the loan facilities. Most of the Banks and NBFI’s are considering similar guidelines in respect to the documents required for secured personal loans. A generic list of such documents has been provided below:

Complete application;

Proof of age;

Proof of identity;

Proof of income;

Proof of address;

Proof of nationality;

Proof of banking transaction;

-  Encashable Securities documents;

Salary certificate (if salaried)

Certificate and profession proof (if professional);

Certificate and business existence proof (if businessman);

Land / building documents (if landlord);