What is analyzed in a loan application?

When there is a need for financing and you choose to apply for a loan, know what requirements you must meet and what is the process of granting credit, it will help you to know what information to contribute when making your request.

Loan application

Loan application

Depending on the type of loan that you are going to request, the documentation that you will have to provide will vary. As a general rule, we advise you to have at hand your ID, your payroll or a proof of income and the card or a receipt that serves to demonstrate the ownership of the bank account in which you want to receive the money. The DNI is necessary to verify your identity. It is about demonstrating that you are the one making the request and preventing another person from sending an application on your behalf. Identity theft and documentary falsification are the order of the day and banking entities have the duty to report this type of fraud. For the rest, if you only need a small amount of money, the process of applying for a quick loan is very simple. In www.hemibank.es, you can request up to € 500 in just three steps :

  • First step: decide the amount of money and the return period.
  • Second step: fill out the web form. The more data and information you provide, the more likely you are to receive an Advance.
  • Third step: when the application is accepted, you will receive the contract to validate it with a simple SMS message.

But… what happened in the second step? What has been analyzed in your application?

Credit history

Credit history

In a traditional loan application, the focus is placed on the credit history. Each time a person requests a loan from a bank, their data is recorded. The entire process is regulated by law, in Spain in particular by Law 16/2011 and derived legislation. Looking after the interests, rights and obligations of the parties that come together in a loan: lender and beneficiary. In this sense, the credit history is the best thermometer to measure the suitability of granting a loan. The history reflects the loans and mortgages granted previously, if the money has been returned on time, the amounts pending payment and similar information. This information, together with the information provided in the loan application, is used to value the granting of loans, but not only the credit history is important, but also the real situation of the person requesting it. The credit history is also reflected in the delinquency files. In many cases, if your name appears in any of these files, your request will be dismissed.

Payment capacity

The ability to pay is calculated by adding the income and subtracting the usual expenses. This is how payroll is considered for employed employees and declared income for self-employed workers. The necessary documentation in this regard will be your last payroll, the letter of pension or unemployment benefit and, in the case of self-employed workers, the income obtained during the last months. The declared income has to be subtracted from the rental expenses, usual household and family consumption, pension plans, mortgage payments… The rest remain as net income. As a general rule, the loans or their installments must not exceed 40% of the gross income, so that their concession does not place an excessive burden. Microloans are limited cash loans in the amount and time of return. In a previous article we explained how to use microloans, underlining the importance of matching the return date with the payroll collection date. And is that the ability to pay our customers is essential to establish the suitability to grant an advance.

Guarantee

Another factor that is analyzed in the granting of loans are the guarantees provided by the client. Guarantees are the assets and guarantees that are declared to meet the payment of the loan in case the money is not returned in a timely manner. The guarantees do not replace the ability to pay, but complement it. In a given case, the capacity to pay may disappear when a person is left without work, but they will keep their guarantees. In the case of microloans, given the amount of the loan, this type of guarantee is not required, being more typical of mortgages and pawnings.

Risk ratio

The experience with the client is of particular importance to us. As our relationship with the client continues, we increase the loan amount and improve the conditions. The same happens in other types of loans. Where, by virtue of the risk analysis, which is calculated taking into account the credit history, the ability to pay and the guarantees declared, the request received is answered. If the response to the credit request is negative, an understanding can be reached with the lender considering other conditions, such as a lower amount of the loan or different repayment terms. In hemibank, our system will determine the amount of money we can offer, so your request will never be denied for the requested amount, because if we can not grant you what you have asked for, we will offer you an advance of lesser amount. We hope this information helps you understand the loan application process, but if you have any questions, you can contact our customer service department.

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