How do banks assess loan applications?
Loan applications are approved or rejected by banks on several aspects. We’ll show you important aspects of the approval process.
In order to approve a loan, the applicant needs to meet several criteria. Have you thought about how it is possible that the bank will not approve an application in which everything looks good, but will approve the loan to an applicant who you would not even lend?
With the experience of assessing more than ten thousand loan applications, we can say that the aspects are really concrete. For non-purpose loans, banks take care of who can get a loan.
We will now look at what all financial institutions are researching when a natural person applies for a loan.
The first thing they research is the type and amount of monthly income
It is understandable that this figure will clearly show us whether or not the applicant has to repay the loan.
Of course, the income is not a guarantee that the applicant will repay the loan, but there are a few circumstances that will help to prevent the application from being approved:
- The applicant is in probation,
- the income does not come on the applicant’s own account,
- the employment contract is of limited duration.
If the applicant has a low income, this does not mean that he / she will refuse the application. In such a case, they may offer him a lower amount than he requested. The main objective of a financial institution is to return the borrowed money to the client.
So, for consumer loans, they focus on whether the applicant will be a good debtor.
In the circumstances outlined, it is almost clear that the application will be rejected. If the applicant is in the probationary period, he or she may be released before the end of the probationary period. If the money does not come to the applicant’s personal account, it probably has illegal work.
If the applicant can prove that he has already extended his employment contract for a fixed period of time, he may receive a loan. In any case, the bank.
Can a trader get a loan?
It is important for the bank that the applicant proves that he / she will have sufficient income each month to pay the monthly installment. Therefore, a novice entrepreneur will not have a chance, as does an applicant who is in the probationary period. If he has been a successful trader for several years, he can get a loan.
It is worth informing before applying for a loan.
The second important aspect is that the applicant is not entered in the debtors register
Almost every financial institution rejects a loan application from people registered in the debtors register. There are several non-bank providers who approve the loan application, but of course at a higher price. That is, either for higher interest, or they will apply for the addition of a co-debtor.
The third important factor in the approval process is the age of the applicant
Most financial institutions will also approve applications for young people who are at least 18 years old. But there are also those that do not give a loan to applicants whose age is less than 21 years.
Even for older people, this is not easy, as in most cases banks set an age limit of about 72 years.
The fourth thing the banks examine is the total amount of the applicant’s existing loans
If the applicant already has a loan in another financial institution, it is unlikely that the bank will approve the second loan because the client has not paid the first. It is different if we apply for a consolidation loan and ask for an extra amount in addition to the consolidated amount.
The fifth aspect is the social background
For each loan application, financial institutions shall examine the applicant’s social characteristics:
- Whether it has a registered address
- in what company he works,
- when applying for a mortgage, they examine the characteristics of the financial guarantee offered.
It is important to note that banks do not distribute their own funds but the resources of their clients. And they pay their profits out of the realized interest.
Therefore, it is very important that banks approve applications with caution;
If you believe you meet these criteria, by comparing the online loan offers on our site you can find out in a few seconds which financial institution offers the most favorable conditions to finance your needs or dreams.
- financial institution
- Receipt confirmation
- approval process