With large loan amounts, many banks demand collateral such as real estate and land. Alternatively, a guarantor may pay for the security of the amount borrowed. Applicants who have neither a savings account nor a variety of securities must expect a rejection. The risk of cancellation increases considerably if no own funds are available.
If you want to borrow money from the bank, a loan application must be made.
This document is put through its paces by the bank. If the loan is rejected, many applicants are disappointed and discouraged. If the bank does not approve the loan, there are usually good reasons for this decision.
To avoid the next cancellation, the application for possible errors should be investigated. The following checklist helps to prevent the most common causes of credit denial.
Banks must refuse credit requests for a variety of reasons.
Missing or questionable creditworthiness:
Numerous cancellations are based on the fact that the applicant for creditworthiness is missing. Banks rarely lend to unemployed people and students. Equally rare are people on low incomes and pensioners
a loan, since the repayment rates are difficult to raise.
Temporary employment contract:
Persons with a fixed-term contract are often rejected as ineligible, as there is a concern that the income will fall if the contract is not renewed and the applicant does not find a new job so quickly.
Only for a short time self-employed:
Those who are self-employed for less than three years often receive a credit rejection. In general, banks are extremely reluctant to lend to the self-employed.
Irregular or low turnover:
The self-employed must show not only the amount but also the regularity of sales at the bank. If the sales are too small or irregular, the loan applications are mostly rejected.
Income can not be seized:
Although people who receive either unemployment or parental allowance have sufficient income for a small loan, this type of income can not be seized in an emergency. Since wage replacement benefits are not attachable, the financial institution considers these funds worthless.
The likelihood of a loan cancellation is very high if the income is very low. If the salary is just above the legal attachment limit, the scope for regular loan installments is minimal.
Mismatch between income and loan amount:
For larger purchases, many people depend on the goodwill of the bank. The application for a bank credit can be rejected even if the applicant receives a high income. It is important to the bank that the balance between income and loan amount is given. If the income in relation to the requested loan is too small, the application will not be granted.
A knockout criterion is a return debit note on the bank statement. The banks research for any return debits. With red numbers and an overdrawn credit line you can usually save a request to borrow because of a bad impression and the bank in turn makes a negative picture of the following credit history.
Involvement of Collection Companies:
If postings by collection companies are proven, they are signs of a poor payment history for the bank.
At banks, the alarm bells are ringing with an overdrawn disposition credit. For the financial institution, the balance in the account of the applicant is not given.
Procedure after cancellation:
Applicants should not be discouraged by a refusal, as not all basic requirements have been met. This checklist helps to detect errors in the application. Following the failure analysis and change, another attempt can be made to raise money at the bank.
For high credits and borderline cases, it is advisable to contact a corporate or financial adviser. This can often help propose solutions to comply with the bank’s internal procurement guidelines.
Numerous online providers specialize in the classic consumer credit sector, which offers not only attractive conditions, but also good conditions. It is also advantageous that the requirements of the applicant are not as strict as in the classical banks. Voluntary information that goes beyond the mandatory fields helps to make a good impression. If the loan application is made by post, it is advisable to send a formal letter to the financial institution containing information about yourself and the subject matter of the financing.