A few years ago, a loan without proof of income was no big deal. By this we mean small loans before the payout up to a maximum of 5 000 USD, here you really did not need a bank statement or pay slip. It sounds good that almost everyone has reached financial assistance, but as a result it has led to a headless indebtedness of a large part of the population. Major changes occurred at the end of 2016, when the lending rules tightened sharply. Not only does every consumer credit provider need to have a permit from the Righthand Bank at the same time it is obliged to sufficiently verify the creditworthiness of anyone who will seek the loan. How do banks and other companies access our data that we make available to them? What are the most common reasons why a loan is rejected?
The higher the risk we pose to the bank, the lower the prospects
With every loan out, the bank and the non-bank provider run the risk of not being able to repay their obligations in a timely and sufficient manner. It is logical that they must eliminate these potential “losses” as much as possible.
Anyone who visits a bank branch or applies online should know what to expect and how best to prepare.
Almost every figure plays a role!
The loan as such is a very specific service and, in order to be paid, we are forced to reveal almost everything about ourselves. No wonder, it is a lot of money. The bank will be interested in whether you have any children, are married, have education, employment, job positions, net income and regular monthly expenses. A person who rents a two-room apartment will have a lower chance of success than one who lives in his own. The age of each client is also important.
A fixed-term employment contract is often a problem. Even worse is the situation when we are in probation or notice. Any income must be supported by a statement of account or pay slips.
The bank also does not forget to check your financial history, which means that it will look into all available registers and easily find out whether you are still paying any obligations, but also that you are late with payment for electricity or mobile services. The biggest problems with obtaining a bank loan tend to be:
- mother on maternity leave
- People who pay off multiple loan products
- people with a negative record in the debtors register
- those who have been incapacitated for a long time
- people in distraint or insolvency
How do I increase my chances of getting a loan?
You will not improve your prospects from day to day, but the sooner you start building your creditworthiness the better. Young people often wave their hands on a short-term loan and do not worry too much about repaying it, but they do not realize that due to a few thousand years later they will not reach the slightest mortgage.
So what can I do?
- Pay on time and regularly all loans, leases, overdrafts and credit cards
- Get organized in recurring expenses such as rental electricity, mobile services, and create a standing order so you don’t have to keep in mind that you’ve forgotten to pay again
- Find a stable job with an open-ended contract
- apply for a loan after your trial period has ended
- educate yourself and strive for career growth
- pay all overdue debts and then seek deletion from the debtors register
- minimize your spending
- apply for a special-purpose loan
- invite a co-applicant or guarantor
Where to go if the bank does not lend me?
With higher demands, fewer applications are approved and therefore a significant percentage of applicants resort to loans outside the bank. Non-bank loans seem tempting at first glance, but they look much more expensive. These providers take even greater risk than banks and therefore charge higher interest rates and all other costs. This does not mean that you will not find a bargain loan, but we recommend that you be more careful and consider in advance whether or not to accept such an offer.
Worth mentioning is P2P loans
A great alternative to a non-bank loan may be the so-called P2P loan , which sometimes comes out more favorable than the one in the bank. What’s going on? The acronym is based on person-to-person lending. In other words, individuals lend to people who are looking for a loan. Potential investors will receive interesting appreciation and clients will receive a favorable loan, all of which is covered by intermediaries themselves.