What banks consider before giving loans?

What banks consider before giving loans?

How long it takes a bank to grant a loan

Knowing someone who works at a bank does not get you better terms. Banks take into account all the information they can access to analyze and evaluate the risk of granting a loan. Your friendship with a branch manager or the good relationship you have with the workers will not make it easier for you to access financing, nor will they improve the conditions.

It is also important to know your income tax return because it allows you to get an overview of your income. Not only of those that you perceive through the salary, but if you have houses in rent or you receive some benefit, etc.

Simple notes and deeds. In case you have another property, the bank takes into account if it is free of charges, what you pay for it, how much you have left… everything is important to be able to make a study of your financial state. In case you are someone’s guarantor, the bank also reviews the status of the guarantor and with what you have guaranteed what type of loan.

How to know if I have been approved for credit

When a company gives credit to its customers, it is granting them a certain period of time to pay the invoices issued for the sale of a product or the provision of a service. Giving credit to customers is a common practice in almost all sectors, although each company must study well what is the necessary credit and the risk limit to be granted to its new customers.  But before doing so, it must check a series of aspects about its companies, since giving credit means making an investment in working capital.

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By giving credit, the company finances its customers, giving them payment facilities so that this “investment” results in an increase in sales and, therefore, in turnover. However, it involves risks and companies must be prepared to manage them.

If effective credit management is to be achieved, a balance must be struck between the benefits of increased sales and turnover and the costs of providing credit to customers. The decision must therefore involve two company departments: sales and finance. They may have opposing interests, so they must reach an agreement in order to maximize sales without taking excessive commercial risks and to control the financial gap with appropriate policies for collections and payments to suppliers.

Can I take out two loans at different banks?

Although the use of credit allows users to build a credit history, it is best to resort to a new credit only when you are free of other debts, so that the sum of the payment of all current credits does not affect personal finances each month.

When using a loan to restructure another debt, it is best to ensure that the conditions of this loan are favorable with respect to the previous one, i.e., a lower interest rate and Total Annual Percentage Rate (CAT), more comfortable monthly payments and as short a term as possible.

If you are applying for a loan for the first time, concepts such as interest rate, monthly payments and term are key to master completely. The term refers to the time it will take to pay off the loan amount in full. On the other hand, the interest rate is the income obtained by the financial institution for the loan and the monthly payments is the amount that will be paid each month until the debt is paid off.

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How to get approved for a loan

Although anyone can apply for a loan (even one of the best student loans on the market), banks and specialized companies take a risk when granting financing to an individual, so, in order to decide whether to approve your application or not, they take into account a number of factors:

Yes, it is possible that banks may decide to give you a loan even if you already have another one. However, as we have already explained, your chances of getting financing are significantly reduced if your profile as a customer is not interesting to the entity, and being in debt at the time of submitting the application will be a point against their approval. In addition, if you apply for several financing products, you run the risk of ending up having to pay exorbitant interest rates, so it is advisable to analyze your financial situation very well before taking on more debt than necessary.

If you are struggling to meet your payments, one of the options available to you is to apply for a debt reunification loan from an entity that improves the conditions you currently have. For example, Deutsche Bank’s Cambia db Loan, with an interest rate of 6.25%, allows you to take all your debts to the bank and extend the repayment term and the amount of money requested.

What banks consider before giving loans?
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