Loan Replacement Prediction Using Machine Learning Algorithm

A loan is money you receive from a bank or financial institution in exchange for a commitment to repay the principal amount with interest. Since lenders take the risk of a possible loan non-payer, they charge a fee to offset this risk this fee is known as the interest. The loans typically are secured or unsecured. In a secured loan, you need to pledge assurance to get the loan. If you are a non-payer of a loan that means you do not pay back the loan, the bank has a right to take possession of the asset that had been pledged as assurance. An unsecured loan doesn’t ask for money assurance. If you do not pay back the unsecured loan, the lender has no right to take anything in return. Unsecured loans include credit cards, student loans, and personal loans all of which can be revolving or term loans. Loan clearance is the act of paying back the borrowed money to the lender. The clearance occurs through a series of scheduled payments, also known as EMIs, which include both principal amount and interest. In this project using a machine learning technique, we are going to predict whether the applicant will pay back the loan amount with interest or not, prior to sanction the loan