Monday, 12 February 2018

See Types Of Collateral Acceptable to Nigerian Banks Incase You Need Bank Loan

By Anayo Nwosu,

Please note that it is illegal for a banker to advance a loan above N50,000 to a customer without collateral.

Even though some bankers do it, that does not make it legal. Many bank branch managers are pushed by the pressure to make profit to flout this law by giving unauthorized overdrafts especially in the market branches.

Because this mode of lending is too risky, the borrower is charged very high interest rates. Remember, the higher the risk, the higher the returns to the lender.

If the law is applied, the banker will be jailed if the loan given without collateral is not repaid.

Therefore, smart customers intent on increasing their capital through bank loan begin early to position their businesses by acquiring suitable assets they can pledge as collateral for bank loans assuming that they have met all other loan criteria.

Borrowing from a bank is not an impromptu act like going to the convenience. Smart customers plan for it.

Most banks in Nigeria feel very comfortable with landed property as a collateral. So acquire one.

Note that land alone is not very acceptable until there is a building, with an approved plan, on it. An undeveloped land could be repossessed by the government. It has happened several times.

The property that will most certainly appeal to a lender must pass the following tests:

1. The property that can be easily sold off is the best suited for loan security. The whole idea is for the banker to sell off your property so easily if you are unable to repay your loan. The location of the property is very key. Those situated at city centres are most appealing.

2. A property without a legal title (e.g. C of O or Deed of Assignment or Conveyance with governor's consent) is no title. You should ensure that you obtain the relevant title on your land to enable you unlock the treasure it holds.

3. The property must have an approved building plan even though the land has a C of O. Governments had in the past, demolished unapproved buildings hence reducing the value of the property. You can get an approved plan even if you have already developed the land by paying penalty. Visit the ministry of lands to make an enquiry.

4. Do not bury the dead in the compound. A visible grave or tombstone inside the compound of a beautiful property has reduced the commercial value of that property. What if the grave houses a notorious native doctor? Bury your dead in another place. That's why the western world invented cemetery.

5. The banker is not interested in the property in your village or town if the place is not a city. He won't accept a palace or property housing a shrine. He can't easily sell those ones.

Small borrowers can borrow against their fixed deposits and treasury bills. In a stable economy, shares of blue chip companies can be used to secure a loan.

Please note that a bank can only lend you a maximum of 75% of the amount realizable when your property is sold in a hurry. The possible price at which an uninterested person would buy your property because of lowered price is called forced sale value. This is usually about 25-30%  discount on the market value of your property.

Use a portion of your profit to buy land in a city and build a house (even if it is a boys' quarter) on it. Then, ask an estate valuer to give you the market value and the forced sale value of the property. That will give you an idea of how much loan you can get from the bank.

Don't lead your banker into temptation of lending to you without collateral.

It is like doing something without protection.

Do not do it to your dear banker.

The above is the secret of many successful business persons.

Please note that a banker, unlike in marriage, doesn’t lend to a credit virgin i.e a customer without credit history. He would rather lend to someone who had successfully done it many times i.e a customer who had borrowed and repaid.

Now you know it, do something today!

anayonwosu@gmail.com

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A Prolific Writer, Entrepreneur, Digital Media Strategist And New Media Expert

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