When lending, various factors are used to decide whether the borrower is paid out. If you need a loan, you must first apply to your bank for a loan. During a personal conversation with his financial advisor, the first set-offs are made to roughly determine whether the borrower has or creditworthiness. Of course, lending can also be done by private individuals or other institutions. For example, investors also grant loans or partial loans on their own terms.
The way to lending
In order for lending to occur, a few steps are necessary. On the part of the bank, security is the top priority. In this way, the customer’s creditworthiness is scrutinized, SCHUFA is asked to rule out existing claims and personal circumstances are balanced against each other. Only then can a loan be granted or a commitment made for the desired loan.
What are the requirements for lending?
In general, the customer or borrower must be able to pay back the monthly installments. Interest is also payable, which must also be included in the calculation. Any ancillary credit costs are then often incurred once, for example when it comes to processing fees or commissions. All of these costs are compared to the borrower’s income, with the main cost of living being deducted. In spite of the credit, these have to be continuously raised lending.
As a further prerequisite for lending, the lien on certain things should be mentioned. For example, if the borrower borrows a sum X for a piece of land or property, the bank reserves the right of lien on it. In the event of non-payment or defaults, the bank can auction the purchased property. The consent of the bank customer is usually a prerequisite for lending. Unless other collateral can be mentioned. These are a further requirement, for example when the borrower has to calculate very closely with his monthly expenses.
Of course, age can also play a role in lending. Long-term loans are no longer given to older people if it is not foreseeable that the loan can be repaid before it dies. Above all, home purchases or home loans are no longer granted with increasing age. Here, lending can fail due to age. In addition, the job or relationship certainly also plays a role. So civil servants certainly have a better basic requirement than someone who is in a conventional employment relationship. Collective agreements and secured employment contracts naturally play a role here.
When there is no lending
The bank can reject a credit request, for if the credit risk would be too high. This is the case, for example, if the borrower has a limited-term employment contract and has generally noted small things negatively in private lender. Lending will be refused if the bank cannot be sure that the money and interest will be returned.