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Each lending relies partly on mutual trust and another part on a rough estimate of whether credit repayment ability exists at all. Therefore, the solvency of the borrower is examined in two directions: on the one hand negative events in the past, on the other hand an extrapolation of possible payment behavior for the future. If you were a bank, then you could use these facts to make an approximate estimate of the repayment probability.
In the Middle Ages, with its mostly only regionally active guilds there was no SchufA and no SchufA information. The business world was clear and trans-regional trade and the associated positive effects on value creation and wealth rare. The economic operators knew each other and were thus able to inform each other if someone did not pay or only paid their open positions by installments after the third reminder. The development of modern banking has created something similar to mutual informing in a structured form. SchufA collects from the banks and lenders, among other things, negative and positive experiences. Who always pays back his loan? Who is shopping and has ten creditors? All this makes it possible to calculate the risk and to set fair conditions for everyone. So if you always pay back easily, then you have a better, lower interest rate available. Experience in the past is used to calculate the solvency of the borrower.
The solvency of the borrower in the future or the forecast of solvency plays an important role. Therefore, most major loans are only pledged on presentation of proof of income or salary. An important role is played by the monthly free purchasing power. From the net wage or net income, the most important expenses such as housing, food, motor vehicles and daily necessities are deducted. Then there is a monthly balance, which is available for further expenditure or a loan repayment. So if you borrow, then the new monthly rate should be below that. Therefore, it may be that a bank proposes a longer term on a loan request, so that repayment is easier for you and without personal restrictions.
Especially at the branch bank, the decision is made by the bank consultant and another employee or the branch manager. The calculation results from the loan calculator and the valuations are only a tipping stone of the credit decision. Ultimately, in addition to the facts and figures available, this may also depend on the planned use of the money.