The conditions to borrow
You want to apply for a bank loan, but do not know what are the necessary conditions? This article is meant to make things clearer to you.
Have fixed and regular income to secure your bank loan
To obtain a bank loan, it is essential to have fixed and regular income. Most banks require a stable job – permanent contract or civil service – guaranteeing a fixed monthly income. In order to prove this financial stability, the borrower is usually asked for his bank statements for the last 3 months.
Regarding this condition, it is recommended that the borrower be completely transparent and honest.
Have low debt ratios
The debt ratio is also studied by banks to determine the creditworthiness of a borrower. They use the 33% rule: the debt ratio must never exceed 33% of the monthly income of the borrower.
For example, if your income is $ 2,000 per month, you will not be able to borrow more than $ 660 per month, or 33% of the $ 2,000.
However, it is sometimes tolerated not to respect this rule of 33% when the borrower’s income is high or when guarantees are sufficient; this decision remains the responsibility of the bank.
His capacity in personal contribution
Personal contribution, particularly important in the context of a home loan, is also crucial. As a general rule, it is estimated at an average of 10% of the total amount of the purchase price (of a property for example), including management and notary fees. To obtain a loan more easily, the contribution must generally represent 20 to 30% of the amount of the purchase.
Like the rule of the debt ratio, the personal contribution is not always an indispensable criterion. It always depends on the borrower’s “remain-to-live”, the remaining resources in a household after payment of all expenses (rent, monthly installment of a loan, gas, water, electricity, etc.). The longer this “remain-to-live” is, the more banks can be ready to make exceptions.
Do not be listed as a banking prohibition
Before granting a loan, banks seek information from the Francia bank to verify that the potential borrower is not prohibited banking. Indeed, in case of bank prohibition, the bank will not guarantee any loan. This condition is true regardless of the nature of the banking prohibition: bank overdrafts, prohibition of issuing checks or loan defaults.
Conclusion on: How to acquire a bank loan?
Thus, conditions may vary depending on the bank, but the conditions of income, debt ratio and personal contribution are found in the vast majority of cases. In order to have the best chance of obtaining a loan, we recommend that you approach various banks: some may be more lenient than others regarding certain conditions. For a clearer vision on the subject, make a simulation!
On the other hand, in the case of banking at the Francia bank, a loan is absolutely not possible, regardless of the bank chosen.