If you’re thinking to avail loan, That’s Great!

But before you attempt to apply for loan from a bank, it is essential to clear off some of the common misunderstandings that our customers usually come across.

A loan can be a smart way to build your dream home, expand your business, or invest in something meaningful. But just a reminder that simply having a collateral doesn’t guarantee a loan.

We get it—if you own land or building especially in a prime area. It feels like the hard part is already done. But at the bank, we don’t just look at the collateral/ mortgage; it is also important for the financial institutions to evaluate how well the loan fits your requirement and financial situation. After all, banks want to help people succeed, not struggle, and partner with each other in strengthening each other’s business and ultimately contribute to the country’s economic development.

How Do Loans Work?

In Bhutan, availing a loan requires pledging some kind of moveable assets like vehicles, machineries, equipment, or immovable assets like land, building, shares, term deposits, and so on. The bank will assess its value, and generally, you can borrow up to 70% of that amount. Sounds simple, right? But wait, there’s more!

Before the Banks approve your loan, they also consider:

1. Your Purpose – Do you need the loan for building a home? Buying a vehicle? Starting a business? Or expanding an existing one? Please remember, a well-planned business/ project can be a great investment for your future.
2. Your Repayment Capacity – The loan amount you take must match with the Equated Monthly Installment (EMI) that fits your income. We want to make sure you are able to pay back the loan on time and that the loan adds value to your life, not stress.
3. The Bigger Picture – While loans help you achieve big things, they come with responsibilities. Missing or delayed repayments can lead to penalties and fees, and in the worst case, could take away your assets mortgaged with the Bank against your loans—assets that might have been passed down for generations or something you worked hard to earn.

A loan isn’t just money, it’s an opportunity. Some tips for this:

• Borrow Smart- Borrow what you need and what you can afford to repay.
• Plan ahead- A well planned borrowing and capital can open doors for you financially.
• Stick to your plan- Adhere to your business plan until you complete the business/ project, repay the loan on time to protect your assets and keep your credit history strong.

If you’re considering a loan, please visit us! We’ll guide you through the process and help you find the best solution for your needs. At BNB, we help turn your financial goals into reality!

Contributed by:
Mrs. Tashi Choden
Relationship Manager
Corporate Credit Section