For a payday loan, there is no need to offer a property as collateral, but there are several other factors that determine the amount of bank loan that can be taken. These include the net amount of income, the length and type of employment relationship, and the fact that we already have other existing loans. Below we summarize how these factors influence the amount of credit offered by banks.
If life brings us the need for a loan, we have a variety of loans to choose from. In general, as in the case of a home loan, we need to provide the bank with a mortgage. A payday loan, on the other hand, is a type of loan where no real estate collateral is required. This can be very beneficial in many cases, as we are reluctant to risk our apartment, but it is also possible that we do not have any real estate that can be pledged. A payday loan can also be beneficial if you need a smaller amount in the short term (up to $ 5-10 million loan, 3-7 year maturity)
In the absence of collateral, the bank will judge whether and how much it will lend to the claimant based on income or financial background. The following aspects will be considered in the assessment: amount and type of income, length of employment, size of potential installment, whether there is any previous credit under the applicant’s name. Here’s a little more detail on each aspect.
The amount of monthly income
It is logical for banks to use income as the basis for assessing a loan application, as this is where the loan is expected to be repaid. Thus, the first consideration is the monthly earnings on your bank account (cash payments are not considered reliable). You must have a minimum wage at the time of applying for a loan, but paying higher can be a big advantage. The higher the reported net income of someone, the less risky the loan can be, so the bank may even offer a discount. However, in the case of a salary above a national average, we already have a good chance of an interest reduction, which, if only 1-2%, can save us thousands of forints.
The type of income
If you meet the age requirements, ie between 20-23 and 70-75 years (otherwise you will need to involve a debtor), virtually any type of income is suitable for banks, so you can apply for a payday loan as an employee, or even with a retirement pension. too. At the same time, the type of employment relationship affects how the next consideration is, that is, how long a given employment relationship exists.
Length of employment
In the case of an employment relationship, the employer will normally have to provide proof of at least 3 months, obviously no bank will lend during the probationary period or the notice period. If you own a business or are self-employed, the minimum requirement is to be able to present one closed business year to the bank.
The size of the installment
As with a home loan, the MNB has also set a maximum monthly installment for a payday loan, which also limits the amount of credit that can be borrowed. No. 32/2014. (IX.10.) Stipulates that the installment payment may not exceed 50% of the certified monthly income (60% of the limit for income above HUF 400,000). At the same time, banks are more cautious and, in general, limit their payments to 35-40% of their salary. In practice, this means that for an average monthly salary of $ 200,000, the installment can be between $ 70 and $ 80,000 per month, which means that for a maturity of 5 years, it will be about $ 10,000. You can apply for 3.8 million forints and up to 5 million for 7 years.
Do we have any other debt?
Of course, the bank will also find out whether you have an active loan agreement (as a debtor or as a co-debtor). This information can be easily obtained from the KHR list (formerly known as the BAR list). If you already have a loan that you are paying off without a problem, this will reduce the amount of income you can take into account, so you can claim a smaller amount as a payday loan. In this case, an unused credit card or overdraft line of credit will be taken into account, of which 5% will be taken into account by the bank (for example, a $ 300,000 credit line is equivalent to a $ 15,000 monthly repayment). However, if the KHR list states that the customer has missed the repayment installment of a pending loan, he will not be able to apply for another loan from any bank.