In many cases, we may need money to spend on which our income is not enough. Such expenditure may occur, for example, before the start of the new school year.
Loans are usually non-purpose and therefore may also be suitable for financing the purchase of a used car or for urgent repair, for medical purposes, or for minor flat renovation.
How does it pay to choose a suitable loan?
In any case, it is important that we use the loan wisely. We should only buy the most important things out of it. There are people who use a loan to buy luxury products, travel, a new TV, and more. But that means they can afford things they just don’t have enough money for. This generates debt and pays much more than the value of the product for interest. Eventually, they get into debt and get into a debt spiral.
Most of these products can be purchased in interest-free installments. Therefore, it is recommended to carefully consider what money will be spent on the loan.
Application procedure for a loan
Financial institutions do not require security such as real estate for loans. It is sufficient if the applicant has a regular income, which must be confirmed by the employer.
Types of revenue accepted by financial institutions:
- primary source of income
- additional or secondary source of income.
The primary source of revenue can be:
- income from employment,
- business activity.
Additional or secondary revenue source:
- maternity leave
- child allowances
- social care.
- Thorough analysis of options
Before applying for a loan, it is important to remember which bank or non-banking company we have a chance to get a loan. They have different conditions and it can happen that while one bank does not give us the desired amount, the other will give much more. By signing the loan agreement, the borrower commits himself / herself to paying monthly installments for a certain period (usually several years), thus reducing the amount available to him / her on a monthly basis. It is therefore a very serious decision.
It is important that we carefully read all information regarding the product after selecting a nice offer, and if certain conditions are not clear, we need to contact the provider to clarify them.
The second option is that we do not decide for ourselves, but use the services of experts to help us find the best deal. It is important that we choose a reputable company that has sufficient experience and references and is not indebted to any bank or non-banking company.
After a thorough examination of the options, you have probably found the most likeable offer.
In this case, it is sufficient to know the conditions under which a financial institution will grant you a loan. These terms and conditions can be found on the Bank’s website as well as all the documents required to apply.
This is the stage at which you already have all the loan application documents ready. These documents will probably be:
- photo ID (driver’s license, driving license, passport),
- Receipt confirmation.
We have already mentioned the secondary source of income. It is important that secondary income is not enough to approve the application. It is important because it allows us to request a higher amount.
If we have the documents available, we can fill in the forms and apply. If the application is not clear, it is advisable to ask the consultant for assistance.
You can apply online at almost any provider. Of course, there are those who do it in a classic way at a branch or come to the applicant’s home.
- Credit rating, approval, disbursement
Immediately after submitting the documents, the bank will start with the assessment of the applicant’s creditworthiness.
If the applicant succeeds, the application can be approved. Of course, the assessment of the applicant’s creditworthiness is a very complex process where financial institutions try to minimize the risk of default. Therefore, if the applicant has previously had difficulty paying monthly installments or is on the debtors register with a negative record, he will have very little chance of approving the application.
If the application is approved, the applicant signs a contract with the provider and then receives the approved amount on his account.