What are the methods of personal loan disbursement?

Loan disbursement refers to the process of transferring borrowed funds from the financial institution to the borrower's designated account or preferred mode of receipt. There are several methods employed by financial institutions to facilitate the disbursement of personal loans, each offering convenience and security to the borrowers.

Methods of Personal Loan Disbursement:

1. Direct Bank Transfer:

• This method involves the direct transfer of the loan amount from the lending institution's account to the borrower's designated bank account.
• It is a secure and efficient way of receiving funds, as the money is directly credited to the borrower's account.
• Borrowers typically need to provide their bank account details, such as account number and IFSC code, to facilitate the transfer.

2. Issuance of a Check:

• In some cases, lending institutions may disburse the personal loan amount by issuing a check to the borrower.
• The borrower can then deposit the check into their bank account or cash it at the branch or any other designated location.

3. Electronic Funds Transfer (EFT):

• Lending institutions may offer the option of Electronic Funds Transfer (EFT) for loan disbursement.
• This method involves the electronic transfer of funds from the financial institution's account to the borrower's account, typically using online banking platforms or mobile applications.
• EFT is a convenient and secure way of receiving the loan amount, as it eliminates the need for physical checks or visits to the bank.

4. Deposit into the Borrower's Account:

• Some financial institutions may have the capability to directly deposit the personal loan amount into the borrower's existing account with the institution.
• This method streamlines the disbursement process, as the funds are readily available in the borrower's account for immediate use or transfer to other accounts.

Each method offers its advantages, and borrowers can choose the option that suits their preferences and financial needs.

Regardless of the disbursement method chosen, lending institutions prioritise the secure and efficient transfer of funds to ensure a seamless borrowing experience for their customers.