When a borrower applies for a loan, there are many variables that will go into the consideration for its approval or decline. On the face of it, there are two major requirements that play a crucial link in the approval process. They are credit requirement and income requirement. These qualifications are further supplemented by other factors, such as the amount required, loan term, interest rates and repayment policy. From the point of view of the lenders, the risk involved in a financial transaction is ultimately dependent on the applicant's credit history, as well as his repayment ability.
Unsecured loans are popular among the borrowers because of its lack of content. But this very lack of collateral turns an unsecured loan deal into a risky financial transaction from the point of view of the lender. Collateral for the lender may be interpreted into surety that the money he invested would be recovered somehow. And in the event of default in payment, legal action against the borrower will enable the lender to resell the asset and recover his money. The consequences of the lack of collateral translate into higher interest rates, smaller loan amounts and shorter repayment plans.
In addition, the borrower has to have good credit rating in order to get the application approved. Scores above 650 are generally considered reliable. The higher the score, the lower the risk you are to a creditor and the less interest you'll pay. Different lenders will have diverse income requirements for loan approval.
As regards to income, getting approved for an requires a trustworthy source of funds. The income amount you'll be required will depend basically on the loan amount you request. However, there are some specific limitations that have to be taken into account. You would be required to show proof of a steady income. This feat can be accomplished by showing copies of your pay checks or tax presentations. Additionally, you may be required to show proof of employment for more than a year in the same job or related jobs with equal or superior income and no gaps at all.
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