To prove that you are a reliable customer, it is essential to demonstrate that you have job stability, a low level of debt and a positive credit history. These factors play a crucial role when applying for a loan, whether to finance a car, get a personal loan or even do a home renovation. In this sense, ensuring that you have a stable job and do not overload your finances with excessive debt are two aspects that increase the chances of your application being approved. Also, when applying for financing for a project such as buying a house or renovating a property, it is essential to demonstrate that you have adequate repayment capacity.
But not only these factors influence the decision of financial institutions, since they also take into account other aspects such as your financial behavior, your savings capacity and the type of loan you request.
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Therefore, it is advisable, in addition to maintaining a good work and financial situation, to also inform yourself well about the specific requirements of each institution and its conditions to obtain the best loan options. financing available on the market. To help you obtain the loan that best suits your needs, we at Kelisto have analyzed in detail the most effective tips that you should take into account before requesting financing.
Detailed tips for getting a loan:
When applying for a loan, it is important to keep in mind that getting approved is not a simple process. Banks and financial institutions take a risk when they offer financing, so they analyze several factors before making a decision.
These include external factors, such as the general economic situation and labor market conditions, which can affect the ability of applicants to pay. In addition, banks carefully examine each person’s financial health, evaluating their level of debt, creditworthiness, credit history, and other factors that reflect their ability to meet loan payments.
These aspects are essential for financial institutions to determine whether the applicant is financially stable enough to take on the debt and whether there is a low risk of default. Therefore, having a good financial history and a stable employment situation is essential to increase the chances of your application being approved. A history of timely payments, the absence of outstanding debts and the stability of your employment are clear signs that you are a reliable customer. In addition, having a stable and well-paid job, with a long-term or permanent contract, strengthens your ability to meet debts and improves the perception of your solvency by banks.
Currently, the negative economic outlook – due to inflation – along with the increase in institutions’ costs – due to the increase in interest rates by central banks – have led financial institutions to tighten their approval criteria in the last quarter of 2022 and will continue to do so in the first months of 2023, according to the latest bank lending surveys.
On the other hand, banks carefully examine the financial health of the applicant, assessing key factors such as debt levels, job stability and general solvency to service the debt.
Demonstrate job stability:
Demonstrating a stable job and providing information about your employer are crucial factors in getting approved for a loan. For financial institutions, having a permanent contract is not the same as having a fixed-term contract. Permanent
contracts reflect greater job stability and, therefore, provide greater security to banks, who believe that the person is less at risk of losing their source of income. Banks also evaluate people who work in the public sector differently than those who work in the private sector or are self-employed.
In general, government employees tend to have a better chance of getting financing because of the stability and job security that their employment brings, which reduces the risk of non-payment. In contrast, private sector workers or the self-employed may be seen as a riskier group, which may lead financial institutions to require additional collateral, such as collateral or more solid financial backing, to approve their loan application.
Check your credit rating to get a loan :
Credit rating is your ability to pay your debts. Banks look at your salary, bank transactions, and whether you have a history of defaults, such as debtor files. In addition, the ability to save is a key factor. Entities also examine your assets, especially if you have debt-free property that can be used as collateral. For example, Abanca’s 24h Auto loan allows you to get between 600 and 6,000 pesos to cover any expenses, but to access it you must use your vehicle as collateral.
Check your debt level:
Before approving a loan, banks carefully review any other outstanding debts you may have, such as some personal loans, mortgages, or credit card financing. They analyze how much these debts represent in relation to your monthly income, as this gives them a clear idea of your ability to take on new financial commitments.
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It is essential to keep in mind that financial institutions, in general, prefer that the total of your debts, including the new loan, does not exceed 30-35% of your monthly income. This ratio tells them that you have a manageable level of debt and that you have the ability to meet the payments of your obligations without putting your financial stability at risk.
Make sure you are up to date with your payments:
Although there are loans that you can apply for even if you are in a default register, keeping your accounts up to date is one of the most important aspects for financial institutions to approve your credit application. Being up to date with your payments shows banks that you are a responsible and reliable customer, which increases your chances of getting a loan. If you are currently in a default file, such as ASNEF or any other defaulter register, it is best to pay off your debts before applying for financing again.
This will not only improve your credit history, but it will also increase your chances of getting more favorable terms, such as lower interest rates and more flexible terms. In addition, by eliminating bad debts, you will be able to have greater debt capacity and avoid financial institutions requiring additional guarantees.
Consider whether you want to maintain your relationship with the institution:
although there are loans that you can get without having to change banks, financial institutions generally reward their customers with the best interest rates. However, not all institutions follow this rule and some offer attractive loans without requiring a connection.
If you review our monthly ranking of the best personal loans , you will see that the top options in our ranking do not require changing banks.
Think about the purpose of the loan:
although it is not a decisive factor like others, the reason why you request the loan also influences the bank’s decision. For example, asking for a loan to buy a house (a long-term investment) or to finance studies abroad (a future investment) is not the same as asking for money to refinance debts, which could give the bank a bad impression of your account. ability to pay. The purpose of the loan also affects the interest rate. For example, vehicle loans generally have lower rates than loans for any other purpose.
Prepare your documents:
Having these documents ready will allow you to submit a more complete application and will make it easier for the financial institution to vet you, thus improving your chances of getting the loan you need. Financial institutions must review several documents before starting the loan application process. Make sure you have all of your documents in order, as this will speed up the process and increase your chances of approval. The most common documents they will ask for include:
– Latest pay stubs and tax return: To verify your income, stability and employer, they will usually ask for your latest pay stubs and your most recent tax return.
– CIRBE data: To find out if you have debts, banks usually consult the Central Bank’s Risk Information Center.
– Real estate deeds: If you own a property, banks will use it as collateral to secure the loan.
Read the terms and conditions of each offer carefully:
Although your financial knowledge will not directly influence the bank’s decision, it is essential to understand the key aspects of the loan before applying for it. This includes the maximum amount you can request, interest rates, payment terms, and the possibility of making advance payments.
These factors are important for both the financial institution and for you, as they allow you to evaluate whether the loan is suitable for your financial situation and whether you can meet the conditions set. It is also essential that the use you will make of the money corresponds to the specific purpose of the loan.
Banks usually offer loans with clear goals, such as buying a vehicle, renovating your home, or consolidating debt. If the money isn’t used for the purpose you’re applying for, you may not get approved, as lenders try to ensure the money is being used for a purpose that justifies the risk. So, before you apply for a loan, make sure you’re clear about how you’ll use the money and that you’re aware of all the terms and conditions that come with the loan. Not only will this help you make more informed decisions, it will also increase your chances of getting approved for the loan.
What are your options if the advice doesn’t work for you?
If you don’t qualify for a traditional loan, there are alternatives such as microcredit, which are less demanding but very expensive. These types of loans, which allow you to obtain small sums of money in a short time, can have extremely high interest rates, over 3,000%.
Can a bank give you a loan if you already have another?
Yes, you can apply for an additional loan, although your chances of approval are lower if you are already in debt. Banks and financial institutions take your current level of debt into account when assessing your application, so if you already have several loans you may have more difficulty obtaining new financing.
In addition, if you submit multiple credit requests in a short period of time, this could create a perception of high risk in the eyes of the institutions, which can translate into higher interest rates. For this reason, it is essential to carefully analyze your financial situation before requesting additional loans.
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Evaluate whether you can really take on new debt without compromising your financial stability and make sure that your payment capacity is sufficient to cover all your current obligations.loan consolidation, as this could help you simplify payments and obtain better conditions.