A loan is a sum of money advanced to an individual or business that must be repaid with interest for a specified period. Loans are classified as debt for temporary use. The lender (mostly commercial banks) must bear the risk that the borrower may not repay the loan. The interest rate charged is the price for that risk.
The rate of interest charged on loans is dependent on its type, as loans that are unsecured (without collateral) carry higher interest rates while secured loans that are backed by assets carry lower rates. Additional factors that determine interest rates such as length of payback period, loan amount and high risk borrowers are dependent on the lending policy of the lender.
Applying For A Loan At A Commercial Bank
The loan application process varies from bank to bank in Guyana but it generally has similar requirements. Commercial banks usually want to know the background and the financial position of the individual or business before giving the loan. They may use any number of criteria to determine if a potential borrower is eligible for a loan. Past credit history is considered along with current income and asset/liability statements. Depending on the type of loan, you may be required to contribute towards part of the cost and, if the loan is approved, the bank will pay the remainder.
The basic requirements for obtaining a consumer loan are:
- Photo identification (National Identification card, Valid Passport or Driver’s
- Recent proof of address (telephone or electricity bill issued within the last 3-6
- Proof of income or job letter
Taxpayer Identification Number (TIN) Certificate
Income/ Salary Assessment
- Agreement of Sale, where applicable
Borrowing to purchase a vehicle has additional requirements:
- Valid Driver's License
- Comprehensive insurance coverage is required for motor vehicles.
Additional documents may be required by different banks.