If you are planning to apply for a loan from a financial service provider, there are a few things you should consider. This can save a lot of time if you carefully prepare the necessary documents in advance. In order to keep an overview, it can be useful to create a checklist.
What documents are required?
In any case, documents are required to prove that the applicant has a regular income. Original bank statements with receipt of salary should be presented for the proof of salary. The original salary slips for the past few months are also required. Anyone who applies for a loan at a bank must also submit copies of the identity card (front and back).
Workers who are paid hourly wages must also submit the last December payroll with annual values. If this is not so meaningful, then a copy of the income tax card of the past year must alternatively be presented.
Soldiers wishing to apply for a loan also need a certificate of service.
Other requirements that credit applicants must meet
The general rule is: The applicant must be at least 18 years old. As a rule, the maximum age is 58 years.
The applicant should also:
- be employed by his employer for at least one year
- get his salary transferred to a checking account
- are in permanent or permanent employment relationships
- Be a German citizen
More documents for self-employed
For self-employed people, further documents are also required, because the bank can only approve the loan application if a credible business concept is presented. A self-employed applicant must therefore submit a profit and loss account and also submit a calculation for the next few years. Applicants who are just beginning to become self-employed must submit a current business plan.
The Credit bureau
For most banks, the approval of a loan application depends not least on the Credit bureau information (What is Credit bureau?) From the customer. The borrower does not have to do the Credit bureau query himself. As a rule, the customer allows the credit company to obtain Credit bureau information. This enables the credit company to evaluate the payment behavior of its customer and assess the default risk of the loan.
Applicants must be patient
For banks, the most risk-free lending is important. To get the desired security, a lot of information is required, which must also be processed. It may take some time for the bank to get an overview of the applicant’s economic situation. As a rule, applicants have to wait up to fourteen working days after submitting all the necessary documents before they receive the transfer or the loan payment.
Borrowers must take this into account before concluding a contract
The annual percentage rate should be within the current, very favorable market situation. You should also pay attention to flexibility and contractually secure the possibility to pay off the loan faster and thereby save interest. Flexibility should also be guaranteed with regard to monthly rates. With long-term loans in particular, it is important to absorb unforeseeable events such as unemployment. Basically, the rates should only be set so small that all other expenses can still be covered without any problems.