If you keep an eye on the lending market, you will discover these offers again and again: Various providers promise the unimaginable: A loan without an audit. This is particularly attractive to customers who have often failed with their loan applications. But they probably will not fare better with a loan without an exam.
The loan without examination: what is normally checked?
Many people are annoyed at the lengthy audit steps that banks take before lending. Before deciding whether or not to grant the requested loan, financial institutions will be able to demonstrate the net income – this is referred to the applicant’s creditworthiness – and banks will want information on possible legacy debts and the payment policy of the potential borrower win the past. This is done via the entry in the protection association for general credit protection as well as the voluntary self-disclosure.
The credit without examination: Why do the exams really make sense?
The people who are annoyed have usually fallen through one or more of the test steps discussed above. In order to increase your understanding of why these exams really make sense, it pays off a small change of perspective in which you think about why you could actually lend money businesslike: You do this with the goal of making a profit that you clearly defined and baptizing interest in the name. However, once you hand over your money, you realize that this is an enormous risk: what if the borrower can not repay the money?
What if one later learns that in the past the borrower always repaid loan installments as he saw fit? For this reason, one quickly develops the need to learn more about the borrower and his financial background in order to be sure that one can lend him his own money, even if he considers the exams to be exaggerated. Why then can financial institutions offer credit without an audit?
The credit without examination: how banks proceed
The answer for all reputable financial institutions is that they can not – at least not completely. When a provider advertises a loan without an exam, it signals its willingness to forego one of the exam steps. Usually the examination of the credit bureau entry is omitted, but other tests can be omitted, but will then be replaced. For example, if a financial institution offers to forego the credit check, it will usually require a guarantor to sign the credit agreement, whose credit rating it will look closely at.
Other banks, for example, who ignore the credit bureau in the lending, instead demand a much higher interest rate, which is well above the average in order to refinance the increased risk of a loan default in this way. One should, therefore, research closely, thereby cushioning the risk of the banks offering to fail various exams.