Anyone who has ever wanted to take out a loan is probably familiar with the household accounts of credit institutions and banks. With this calculation, the banks check above all whether the borrower can also afford the desired loan, that is, can pay from his income. So it is the bank’s safeguard not to give financial benefits to people who cannot repay them.
The banks request some documents from the applicant to check the creditworthiness. First of all, of course, this is proof of income. So the pay slip or the last three pay slips. In some cases, confirmation is also required that the borrower has no fixed-term contract.
The three consecutive salary slips also show the bank advisor on the household bill for the loan whether a garnishment has already been attached. Which of course is an exclusion criterion for lending. A copy of the ID card can also be requested from the banks.
The bank advisor then compares the income with the expenditure. In other words, it lists which expenses, such as rent, car, insurance, maintenance, food, etc., have to be deducted from income. For example, many people cannot quantify their monthly expenses for clothing, groceries, household insurance, telephone and internet, or only very inaccurately. For this reason, the banks apply a lump sum for this. This is between 650 USD and 700 USD per month.
If more than one person lives in a household, a flat rate of 200 USD is added for each additional person. The banks do not consider whether they are adults or children who live in the same household. Because the demands and living habits can change over the years in which the loan runs and there must also be enough money available for living for several years. In many cases, lending already fails at this point, because the cost of living, which the banks have set relatively high, is not attained by many borrowers.
If all the required criteria of the banks have been checked positively, in most cases there is nothing standing in the way of lending. If the mandatory credit bureau information does not produce any negative entries, the loan amount is paid to the borrower. The budget bill for the loan should, however, be filled out honestly or discussed with the bank advisor. It is of no use to the bank or the borrower if the installments can no longer be paid in the end.