A policy loan is a way of applying to a bank for a loan under a purchase policy as collateral. Such loans are more easily approved because of the fixed and guaranteed nature of the policies. The information and procedures required for policy loans are analysed from different angles below。

What information and procedures are required for a policy loan

Loan information and procedures

Generally, lenders are required to provide the bank with the following information and procedures: identification, original or a copy of the policy, application form, repayment plan and other information as may be required, such as information on the guarantor of the loan and relevant documents. The credit records of borrowers are also one of the key indicators of bank audits。

Policy information and procedures

In order to obtain a policy loan, the lender is required to purchase an insurance policy, usually life insurance. In the purchase of insurance, care shall be taken of the type and amount of insurance. Most banks only accept insurance policies that meet certain conditions as collateral for loans. The lender is therefore required to verify whether the policies held are in accordance with bank requirements。

3. Interest rate on loans

Banks set different interest rates depending on the type and time of the loan, including fixed and floating interest rates. Fixed interest rates mean that the interest rates on loans remain constant during the loan period, while floating rates vary with the market. Borrowers need to carefully comb the bank ' s interest rate policy to ensure that the loan rate is the lowest。

4. Method of repayment

There are usually two ways to repay a policy loan: an equivalent principal interest and an equivalent principal. Equivalent principal repayments are the equivalent principal and interest payments per instalment, which means that repayments will be relatively high in the early years but will decrease over time. Equivalent principal repayments are the equivalent of principal repayments made in each instalment, but the monthly repayments continue to decline as interest on the loan decreases year by year. The lender should choose the appropriate repayment method according to the personal circumstances。

In sum, a policy loan requires more complex information and procedures. Creditors should choose a bank of good standing and comply with relevant regulations and policies. At the same time, lenders need to look closely at the bank ' s interest rates and repayment modalities in order to better manage their financial position。