Applying for a loan from a financial institution, even in those that are only online, is a process that takes time and, in addition, forces the applicant to give it a couple of turns to the head to be sure of what they need. It is a contract and as such cannot be taken lightly. The borrower must be aware that in a certain time they will have to repay the requested money plus interest, commissions and expenses. However, a loan is not a matter of just one person and the bank that grants it has to look after their interests and assess whether the applicant has the ability to pay to repay the loan. To achieve this, there are a series of conditions to request a loan that you have to meet in order to be granted this financing.
Conditions that the applicant must meet to request a loan from a financial institution
When granting a loan, of whatever type, each financial institution (also online) can establish different conditions. It will depend on the bank’s risk policy, the amount of money it lends, and the purpose. Despite this possible disparity, there are some common requirements that all banks require of people who come to them in search of a loan. Among others, there are the following:
- Being of legal age: banks need to ensure that the money lent will be returned to them and this is only possible if the applicant has a stable credit history and regular income. Two difficult conditions to meet if you are a minor.
- Solvency and stable income: or in other words, demonstrate that the borrowed money can be repaid. To fulfill this, the person requesting the loan must demonstrate that they have a stable income and, in addition, greater than the obligations acquired with the bank. For example, if it is agreed that each month you will have to repay €300 of the loan, you will need an income that allows you to do without that monthly amount.
Seeing these general requirements to request a loan, it is easy to guess that people with a regular income or with an indefinite contract, with seniority in the same company, or if they are civil servants or public employees will have more facilities to access a loan.
What is the personal guarantee?
When requesting a loan, it is necessary to be aware of a general principle of our Law included in article 1,911 of the Civil Code and which stipulates the following: “The debtor is responsible for the fulfillment of the obligations with all his assets, present and future. ” This means that the debtor has the obligation to pay the amount agreed with the bank using all his current and future assets. When more than one person is involved in the operation as co-owners of the loan, two types of guarantees or personal responsibilities can be given:
- Joint and several liability: the bank goes indistinctly against one of the debtors for 100% of the amount of the loan and then between holders the amounts agreed for each one can be claimed.
- Joint responsibility: each debtor responds to the bank for a determined amount of the previously agreed loan, totaling 100% of the loan.
Necessary documentation and additional requirements to request a loan
Depending on the bank in which the loan is requested, more or less documentation will need to be delivered. The most common thing is that the loan applicant must provide the bank with their NIF or NIE, the current account number where the money is deposited, a photocopy of various pay slips and any other regular income they receive, their working life so that the bank can get an idea of your relationship with the companies in which you have worked.
In addition to all this documentation, if the loan applicant is self-employed, they may be asked to include a photocopy of the self-employed registration document, the last annual VAT return and the last installment payments of personal income tax.