The home loan industry is growing in pace irrespective of the slow moving real estate markets. There are many reasons which attributes for its steady growing – be it new NBFCs entering the home loan industry or banks/NBFCs hiring the outsourcing agents (commission agents) such as DSA’s for improved business or by introducing newer loan products to meet the borrowers demanding requirements of increased funding or raised eligibility. The home loan industry always walks the path because to have a shelter i.e. a home is the basic necessity of the human mankind. All dream of owning a house of their own be it a rich or a poor. There are many first-time home buyers and low & middle-income families that rely on low-cost properties to move from renting to owning a home. But what is more challenging is making a dream come true for the poor, low-income group borrower. To be specific it is not only the low income profile category rather every single one who is looking for a smaller loan amount, finds it hard to come by. Even when the banks and NBFCs spends on the advertisement marketing and media marketing on their small value home loans, then why is it that a borrower has to run from pillar to post to get his small value loan sanctioned?
4 Barriers In Getting A Small Value Loan
1) Employees Attitude Towards Small Value Loan.
Home loan being in the sales industry, all sales employees in the home loan department have to achieve the sales number in a month. They are bound to achieve the monthly sales target to justify their monthly pay. And as a sales rule sales targets are always set high for the sales team and its employees. Therefore the small value loan borrower naturally gets neglected by these sales driven employees who run in search for high ticket size loans.
2) Employees Incentives In Small Value Loan.
Banks and NBFCs in order to motivate their employees to achieve higher numbers in loan disbursements, time to time announce various incentives polices for its employees. The higher the ticket size of the loan the higher are the incentives and vice-a-versa. The smaller the value of the loan the poor are the chances of to qualify for extra earnings.
3) Turnaround Time
The processing time for loan application is uniform for all loan application be it a small value loan or a high ticket size loan. Both requires equal amount of efforts, devotion and time for its processing. And this is why the high ticket size loans gains preference over the smaller ticket size loans.
4) Operational Cost
Banks have to incur all of the operational costs of generating a loan regardless of its ticket size. Also the servicing costs for loans of any ticket sizes remain same across the board which is why banks/ NBFCs maintain minimum loan requirement criteria for providing loans. The smaller the loans the smaller it offers the opportunity for profits and vice-a-versa.
Conclusion: Even if a borrower pose a no risk factor to the bank by providing a collateral to borrow the required small amount of loan, yet the banks show poor interest towards his loan request owing to above 4 mentioned barriers. On the contrary even if his request is taken into consideration he will be charged with the higher processing fees or high interest rates or both- reason being “The loan he is applying for is too small”.
Loanfasttrack is a specialized Loan provider in Mumbai markets with its existence in the Online market since 2015. It offers Home Loan, Mortgage Loan, Personal Loan, Business Loan, Car Loan, Top-up Loans & Loan Transfers.
Ushali Mishra - founder of Loanfasttrack - Mumbai based company specializing in loan industry offering multiple loan products of Home Loan, Mortgage Loan. Business Loan, Car Loan & Personal Loan.She has considerably vast knowledge in the field of mortgage and home loan industry. She has successfully written more than 200 blogs on finance and on loan industry.This author has published 1 articles so far.