Got Loan Approval? Here’s What to Know About the Disbursal Process

The loan processing system operates through several stages. It begins when the borrower submits an application that the lender must verify and confirm. Once the verification process yields positive results, the loan amount becomes eligible for release. The overall loan approval process consists of two key stages: loan sanction and loan disbursal.

A loan is sanctioned when the lender approves your loan application. The sanctioned loan amount depends on the details you provided as an applicant together with your ability to satisfy the established eligibility requirements. Loan disbursal is the next step wherein the sanctioned loan amount is credited to your account.

Before moving ahead, make sure you understand these essential details about loan disbursal after your loan sanction.

1. Full vs. Partial Disbursal Of Loan

The bank sends the loan amount directly to your bank account when you take out loans against property or personal loans. The entire loan amount gets approved through this process. The bank releases the approved loan amount for home loans and education loans after they receive the demand letter from the developer or academic institute depending on the situation.

The bank will release funds for each construction phase completion when the property remains in the construction phase. It will transfer the full loan amount to the seller when you purchase a ready-to-move-in or resale property.

The bank follows the college/university tuition payment plan to distribute education loan funds after they receive the disbursement letter from the borrower. The tuition payment goes directly to the educational institution or into the borrower’s bank account. The borrower receives the academic expenses, which include hostel fees and conveyance costs, in their bank account.

2. Final Loan Disbursal Subject To Revision

The bank determines the loan amount through a complete assessment of the borrower's profile. The stated amount exists under multiple specific conditions.

The bank requires property evaluation of the chosen property before it issues a home loan. The assessment process evaluates multiple factors which include location, size and construction quality. The borrower needs to provide various documents which include property title, layout, existing owner information, and cost details, depending on whether they bought from a reseller or a developer.

The bank determines the property value after completing all required inspections. The bank will adjust the loan amount if the property value assessment from the bank falls below the valuation stated in the sanction letter. However, the bank will evaluate various elements, including loan-to-value (LTV) ratio and loan repayment duration before making a decision.

3. Your Contribution Triggers The Disbursement

Some types of loans, like a home loan, require a down payment before getting sanctioned. Banks provide home loans which cover 80 per cent to 90 per cent of the property value according to the loan-to-value ratio. The borrower needs to provide the remaining 10 to 20 per cent of the property value, which serves as the down payment. The payment needs to be made before receiving the service. The bank will start sending out funds after they receive confirmation of this payment.

The bank will determine your educational loan margin based on your disbursement schedule. The loan application process requires you to get information from your lender about margin requirements and payment terms.

4. Repayment Kicks In Immediately

The loan disbursement activates the start of interest calculation and EMI payment obligations for the borrower. Home and education loan borrowers get the chance to postpone their loan payments through a moratorium period.

The loan application process requires you to submit accurate information and have enough down payment ready to receive your loan money. The bank can cancel your approved loan if you submit false information.

Before the loan disbursal process begins, all required fees must be paid during the loan agreement signing. Carefully review your loan agreement before signing and ensure any errors are corrected.