In the field of banking and finance, we must have encountered many times the phrase “disbursement”. Especially for customers who register for consumer loans, mortgage loans. So what is disbursement? How is the bank’s disbursement process? How many disbursements are being used?
All will be answered by Fastloans.PH in this article.
Table of Contents
What is disbursement?
Particularly in the fields of finance, banking, disbursement is construed as follows:
Disbursement means the payment of an amount of money by the Bank or credit institution according to the loan agreement signed between the Bank-credit institution and the borrower. Disbursement is also known as Drawdown.
Generally, disbursement means the payment for a particular item or work with money or capital after completing the procedural and implementation requirements for the item or work. there.
What is disbursement in banking field?
The disbursement process can be done once or divided into several times depending on the terms of the contract. Disbursement method can be made in cash, check or gift voucher …
Reference: What is inflation?
- Disbursement amount: is the maximum loan limit of a Bank or finance company.
- Accumulated disbursement: ie statistics that summarize the amount that has been disbursed in a given time period.
- Disbursement Operation: is the process of completing disbursement conditions to disburse loan funds.
- Disbursement conditions: is to allow disbursement decisions when there are sound and solid grounds
- Money to disburse: from Decision on how to plan money (capital) is born
- The decision to plan money (capital) is born from the agreement of the parties to an economic contract.
- Beneficiary: is the payee
- Blockade disbursement and non-escrow disbursement: can take a specific example in real estate trading.
Reference: What is settlement?
Bank loan disbursement process
In order to be able to disburse the loan when borrowing money from a bank, customers need to complete the prescribed steps including:
Step 1: Apply for a loan and collect information
Step 2: Prepare loan application
Step 3: Evaluate the loan application
Step 4: Approval
Step 5: Disbursement
Apply for a loan and collect information
Customers find out loan information and register for loans by providing necessary information such as ID number, desired loan amount, loan type, living area …
Based on customers’ registration information, credit officers advise on suitable loan forms, documents to be prepared, interest rates on bank installments. So what are the disbursement records?
Prepare loan application
The loan application package usually includes the following documents:
- ID card & household registration
- Loan offers are provided by credit officers
- The income proof documents include the labor contract, salary statement or salary confirmation for the last 3 months.
- For mortgage loans, it is necessary to prepare a plan to use capital, red book, pink book …
- And some papers required by the Bank
Appraisal of loan application
This is the most important step in being able to complete the bank’s disbursement process. This is the step of checking whether the information submitted by the customer in the loan application is correct or not to avoid credit risk.
For the form of a bank red book mortgage, this is the process of asset appraisal to decide a loan limit.
During the appraisal process, if there is any error in the paperwork, the Bank will request the customer to correct and supplement the loan application.
Once the appraisal process has been completed, the appraisal department reports the results and proceeds to approve the loan, starting to complete the disbursement file.
Common disbursement methods include:
- Cash disbursement: customers receive directly at the bank
- Disbursement through bank account: in this case, the customer provides his or her account number at the bank as loan application or from another bank. The disbursement department will conduct checking, verification, and transfer after completing the bank’s disbursement process.
What does disbursement document include?
After being approved for a loan, customers need to prepare all required disbursement documents, including:
- Legal documents: ID / Passport; Household registration book, single status certificate or marriage certificate if married.
- Financial documents: include all documents proving the customer’s income such as labor contract, payroll or salary statement (if there is salary income); Business registration papers, books of sale, invoices (with income from business activities), proof of ownership, proof of rental income (with income from rental property) .
- Documentation of the purpose of capital use: Documents proving the purpose of using the loan capital such as sale contract, deposit slip, notice of payment (in case of loan to buy house, buy car, …); House construction and repair estimate, cost estimate (when borrowing to build a house); Business license, financial statement, future capital needs (when borrowing for a business).
- Profile of collateral: It can be hohuse title in the name of the owner; Vehicle registration if collateral is a car …
How about disbursement frequency?
Disbursement frequency is the number of loan disbursements over a given period and there is no fixed value when it comes to the frequency of disbursements.
Depending on the type of customer, the amount of the loan, the loan purpose or the bank that supports the loan, the disbursement frequency differs.
However, customers will be consulted on the disbursement frequency in advance in order to proactively use the loan source most reasonably.
Disbursement time of bank loan
The disbursement period for a loan application depends on the following factors:
- Forms of loan: secured or unsecured?
- Was there any shortcoming in the application preparation process
- Appraisal and disbursement procedure of the supporting bank (assuming Metrobank has a different appraisal process than BDO Unibank)
Under ideal conditions that means everything is favorable, disbursement time for unsecured loan application is 1-2 days, mortgage loan is 7-10 days.
How to receive fast disbursement?
When borrowing money quickly, in order for the application to be disbursed quickly, customers need to note some of the following issues.
Firstly, you need to prepare all required documents from the Bank. All papers must be clear and fully informed. In case documents are photocopies need notarization, notarization time is valid for 6 months or 3 months depending on regulations of each lender.
Second, when borrowing money, it is necessary to pay the debt fully and on time. If there is money, it is possible to settle the file ahead of time. That way, your credit score will be high and the next time your application will be disbursed, your application will be easier to disburse.
Third, for mortgage loans, capital use purposes need to be guaranteed during the repayment period, do not use disbursed funds for illegal purposes to ensure quick disbursement in the next loans.
Commercial joint stock banks or State owned banks usually have disbursement procedures from 1-2 days. If you are looking for a credit institution to support online loans, disbursement during the day, financial companies such as Robocash, Home Credit, Moneycat … are an option to consider.
Note when completing the disbursement procedure
In order for the disbursement process to take place smoothly and safely, customers should note the following points:
Carefully read the contract and its terms.
Before disbursement, if you have any questions about the loan profile, interest rate or the terms of the contract, immediately consult a consultation as it cannot be changed after the application is disbursed.
It is necessary to prepare all documents as required by the Bank.
In case the application has been approved but not disbursed, customers can refuse to disburse if they feel they no longer need this loan or for some reason arising.
Above, Fastloans.PH has provided you with the necessary information to answer the question “What is disbursement?”. Customers wishing to borrow unsecured loans can contact us via Hotline for the fastest loan application consultation.
Hope this article has brought you useful information.