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Loan Security Type

  • 80views
  • February 7, 2024

Loan Security Type

The Loan Security Type determines the category of assets that can serve as collateral for a loan, such as stocks, land, and so forth.

When processing a loan application, if the requested loan is secured, some form of collateral must be pledged. Within the Loan Security Type master, you can specify the particular type of collateral required.

To access the Loan Security Type list, go to: > Home > Loan Management > Loan Security > Loan Security Type

A Loan Security Type includes information regarding:

  1. Unit Of Measurement: The measurement unit for the loan security.
  2. Haircut %: The percentage reduction applied to the market value of the loan security when used as collateral.
  3. Loan to Value Ratio: The ratio of the loan amount to the value of the security, indicating the threshold below which a shortfall in loan security should be addressed.

The haircut percentage represents the percentage variance between the market value of the loan security and its value assigned as collateral for the loan.