When assessing an application for a cash loan, the information on the client’s monthly income is taken into account. They should be high enough to be free enough to pay the loan installments with interest and to retain the customer.
A simple bank loan
Actually, cash loans can be found in the offers of all banks in the country. These are commitments that allow you to finance any borrower’s credit goals. The bank does not impose the manner in which the money from such a loan is to be used, nor does it require the customer to establish additional collateral for its repayment. Of course, sometimes it may happen that the purpose of lending is defined, but this is not a universally binding practice.
Who is the cash loan for?
Customers with a complete loan application, including the required attachments, and good creditworthiness and good history have a chance to obtain a cash loan. loans in the Credit Information Bureau.
At the same time, creditworthiness is understood as the ability to repay the liability in a timely manner, together with any interest and additional charges. It is obviously influenced by the amount of income that the customer receives when applying for a cash loan at the bank. How high must this income be in order for the bank to comply with the loan application and make the commitment?
Individual examination of the loan application
In fact, every person who earns, whether on a contract of employment, contract of employment or on account of a pension, has a chance of positive consideration of the application for a cash loan. The Bank individually approaches its assessment and calculates the creditworthiness on the basis of the algorithms used. A low salary does not have to immediately exclude the client from applying for a loan, but it will definitely work against him.
Banks take DTI into account when assessing the creditworthiness of their clients. It specifies the percentage share of credit obligations in the borrower’s household budget. Most often, loans are considered a safe DTI, where the amount of the commitment will not exceed 1/3 of the client’s earnings. In turn, the Financial Supervision Authority stated that in the process of assessing the creditworthiness of retail customers, banks should pay special attention to situations where the DTI exceeds 40 percent. for clients, the income not exceeding the average level of remuneration in a given region of residence and 50% for other customers. Currently, the banks themselves ultimately set the maximum DTI.
However, following the instructions, when applying for a cash loan in the amount of USD 10,000, where the monthly installment will amount to USD 850, the client would have to earn at least USD 2,100, to preserve 40 percent. DTI indicator. In practice, however, such income may not be sufficient, because the client’s other monthly liabilities and the amount necessary to maintain it should be deducted from them.