A Loan in Plans? Check Your Creditworthiness
If you are thinking about a non-bank loan, it is worth knowing your creditworthiness in advance to know what amount we can apply for. More exposition at http://www.vivrele.net/choosing-the-right-vehicle-leasing-deal/
Choosing the right amount of the loan is – besides choosing a loan company – the most important decision with which we will face the process of applying for external financing. None of us like to meet with negative decisions – they always ruin our plans. In order not to be in a situation where we apply for financial support, it is worth getting to know your creditworthiness in advance. This knowledge will tell us what amount we can apply for.
The concept of creditworthiness
Following the definition of banking law, we understand that creditworthiness is nothing else than the entity’s ability to pay the liability for which it applies together with interest in the terms specified in the contract. In other words, creditworthiness allows us to determine if there is a real chance that we would pay the loan taken out on time.
What is important for a lender?
Our creditworthiness is the first thing that will be checked by the lender upon receipt of our application immediately after the initial verification of the identity. The analysis of our creditworthiness is one of the conditions for receiving an installment loan in the amount we applied for. In order not to be disappointed, it is necessary to pre-estimate your creditworthiness, which will tell us whether we can afford the loan we are seeking. What affects creditworthiness?
- The amount of income – the most important thing here is that it should be stable and regular;
- Fixed fees – costs that we must cover every month, i.e. rent, fees for utilities, bills;
- Maintenance costs – rounded amounts that we spend on grocery shopping;
- Financial liabilities – other loans, credits, credit cards;
- Others – sums that we spend on pleasure, such as going to a restaurant, cinema, meeting friends.
Calculation of creditworthiness
If we want to find out what loan we can afford, and so what is our creditworthiness, we need to estimate the free amount that we have every month. To analyze your monthly expenses, we need a sheet of paper or the simplest spreadsheet. We start with the creation of two columns – one is entitled “revenues” and the other “loads”. In the first column, we enter all our receipts into the account. In the second, we place the amounts we spend on the previously mentioned expenses, such as housing charges, maintenance costs, and other installment loans. After filling the table with reliable information, we calculate the difference. As a result, we will receive an amount, a part of which we can use to pay installments of the planned loan. Remember, however, never to take into account the entire amount received as a result of free funds, because we often happen unexpected, extra expenses. If we do it differently, we may have a problem with settling debts, and the consequences of unpaid loans are serious.