If you want to lend money to a bank or a financial service provider, you must fulfill a few requirements. Regardless of where the loan is to be taken, for the lender is always the repayment in the foreground. So the borrower has to meet some conditions to get a loan approved. Our team will provide you with a clear checklist here.
What factors play a role for banks in evaluating loan applications?
- credit rate
The credit rating
Banks check the payment behavior of potential borrowers. The instrument for this is the credit rating. The credit rating is assessed by the credit bureau, for which a lot of different information is obtained. Especially if there were irregularities in the repayments or a checking account was canceled with previous credits, the chances are very bad.
The credit rating should be as free as possible when applying for credit in order to obtain a favorable credit.
Absolutely irrefutable is a permanent residence in Germany. Anyone who wants to apply for a loan from a German bank in Germany may not live abroad.
Here must be divided into two different groups. On the one hand self-employed and on the other employee.
The most promising is an indefinite employment relationship. Here, the bank has the best possible security on a successful repayment of the loan. It is more difficult with a fixed-term employment contract or in training. Of course, the amount of income must also allow repayment of the loan.
For self-employed the situation looks more complicated. Even if the self-employed person earns a lot of money, from the point of view of the banks, this source of income is less secure and predictable than with an employee. The self-employed must be able to prove a stable income for years.
Only from the age of 18 is it possible to take out a loan in Germany. Another limitation is age. At an advanced age it is difficult to obtain a loan. The explanation for this is simple: Banks love collateral, who is already old, has a shorter residual life. Banks are reluctant to lend money to a person who may die before full repayment.
Collateral is a great argument for banks. For example, life insurance can serve as collateral for the loan. If, for example, a property or a car is bought, they can also serve as security. Another type of security could be a guarantor.
The credit rate
The loan rate must be well thought out and planned. Ultimately, the income and the available money must also allow the credit rate.
Those who prepare well for their loan application definitely have a better chance of being accepted. However, there are a few factors that can hardly be influenced.
With a bad credit bureau score, the potential borrower has to look for alternatives. Banks are unfortunately very inflexible here, even if the loan could be easily serviced.