The most common conditions when applying for a loan
Requesting a loan from a financial institution is a process that takes time, and the applicant must also spend some time thinking carefully about his or her actual needs. A loan is a type of contract, and this means that it must not be taken lightly. The borrower must be aware of the fact that the money loaned will have to be paid back over a certain period of time, along with interest, fees, and costs. Of course, a loan is not just about the borrower, since the bank granting it must look out for its own interests and determine whether the borrower will have the ability to pay back the money loaned. This means that there will be a series of conditions that a loan applicant must meet in order to be granted this source of financing.
Conditions that a loan applicant must meet
When a loan is being granted, regardless of the type, each financial institution is allowed to establish its own set of conditions. These will depend upon the bank's own risk policy, as well as upon the amount being borrowed and its purpose. In spite of this potential for variation, there are some typical requirements that all banks will ask of any individual seeking a loan. Among others, these include the following:
- - Being of legal age: banks need to be sure that the money they loan will be paid back, and this is only possible if the applicant has a stable credit history and a regular source of income. Both of these conditions are difficult for a minor to comply with.
- - Solvency and stable income: or in other words, evidence of having the ability to pay back the money loaned. To meet this requirement, the person requesting the loan must demonstrate that he or she has a stable income, which must also exceed the obligations taken on with the bank. For example, if the loan will require €300 of the total amount borrowed to be paid back each month, there must be income sources that will allow this amount to be freely available on a monthly basis.