Loan is a financial obligation on the part of the lender (bank) to the borrower (customer). Generally speaking, there are three categories of loan in Nigeria and they are consumer loan, retail credit/loan and commercial credit/loan.
Consumer loan products are risk asset products created to enhance the lifestyle of individuals. Examples of consumer loan products are quick loan, asset acquisition loan, salary advance and auto loan. Retail credit is any loan whose amount is less than or equal to NGN20 million which is availed to corporate bodies. Retail loan could take the form of overdraft, term loan, lease finance, LPO finance and import finance. Commercial credit is any loan from NGN 20 million and above that is availed to corporate organizations.
First Bank PLC has a lot of consumer loan, retail loan and commercial loan products. The bank‘s variation of consumer loan includes automobile loan, personal home loan, personal loan against salary, household equipment loan and joint mortgage. To access any of these loan products from First Bank PLC, one must have his account (salary account) domiciled in First Bank.
Getting a loan from First Bank PLC involves three stages. The first stage rests on the customer. The customer has to write an application for the type of loan he wants and the application must include the purpose of loan, amount of loan, tenure of the loan, source of loan repayment and collateral for the loan (if required). The letter (of application) must be addressed to the branch manager of the branch of First Bank which the salary is domiciled and after it is written and signed, the customer presents it at the bank for onward processing.
The second stage rests on the bank. The bank receives the letter and starts processing. The bank reviews the application, writes Credit Appraisal Memorandum (CAM) which highlights the customer‘s capacity, character, collateral, condition and capital, generates the loan repayment schedule, prepares the offer letter which specifies the terms and conditions under which the loan will be granted.
The third stage involves both the bank and the customer. During this stage, the customer executes (signs off on) the offer letter and meets the conditions precedent to drawdown. The conditions precedent to drawdown includes provision of post dated cheques that cover the entire duration of the tenor of the loan (facility), presentation of a reputable guarantor, execution of guarantor‘s form and statement of personal net worth form by the guarantor, provision of proforma invoice (for automobile loan), equity contribution (for automobile loan, personal home loan and joint mortgage), presentation of statement of account and execution of statement of personal net worth form by the customer.
As soon as the customer meets all the aforementioned conditions precedent to drawdown, all the document are sent to First Bank‘s compliance department and the department approves and books the loan.
After the loan is disbursed into the customer‘s account, the customer withdraws the cash and the repayment process follows. According to the bank‘s policy, if the loan is disbursed before the 15th day of the month, the customer starts the repayment of the loan that same month but if the loan is disbursed after the 15th day of the month, the customer starts the repayment the following month.