The Loan Amount
Licensed moneylenders factor several factors into loan amounts. They’ll start with income and credit. They’ll also want to know how you’ll use and repay the loan. Finally, they must ensure you’re not overspending. Thus, they won’t just lend money. They want to make sure you can repay it and aren’t risking your finances.
The Borrower’s Earning Capacity
When you go to a licensed moneylender for a loan, they will first ask you about your earning capacity. This is one of the most important factors they consider before approving a loan. Your earning capacity is a measure of how much money you’re making and how likely you are to be able to repay the loan.
Moneylenders want to make sure that you’re not going to be struggling to make your monthly payments, so they’ll look at your current income, as well as your credit score and debt-to-income ratio. So if you’re looking for a loan, make sure you have all your paperwork to prove that you can afford to repay it.
The Borrower’s Credit Rating
Licensed moneylenders weigh your credit score before lending. This is because your credit score reflects how likely you are to repay your debt on time. Moneylenders avoid high-risk borrowers with low credit scores. You can still get a loan, but it may cost more or require more collateral. How can you improve your credit? Pay your bills on time and maintain good credit. You can also get a copy of your credit report and ensure there are no errors. Finally, minimize debt.
The Borrower’s Employment Status
Moneylenders consider employment status when granting loans. You’re more likely to repay the loan if you’re employed. They’ll check your pay stubs to estimate your monthly income. For financial stability, they’ll want to see your business license and tax returns if you’re self-employed. Overall, licensed moneylenders will consider more than just your employment status before lending. It’s crucial, so give them all the paperwork.
The Borrower’s Residential Status
Licensed moneylenders consider several factors when assessing your residential status. First, they want to verify that you live in the loan’s country. Illegal money lending is prevented by this. A utility bill or driver’s license will be required as proof of residency. Finally, they’ll examine your credit history and score. This will help them determine how likely you are to repay the loan on time. You’ll benefit from a good credit score.