Each bank, MFI or other organization sets its rules. To get a loan at a pawn shop, it is enough to show an ID and leave something valuable as collateral. You usually only need an ID for a consumer loan in an MFI, while the bank can set more conditions before giving you a loan, especially for a large amount. But there are several general requirements.
There are only two mandatory documents for microfinance companies: an identification document and a loan application. No scanned copies or photographs are required. The main thing that a new client needs to do is to fill out the application in as much detail as possible and answer questions truthfully and fully. In this case, your chances increase. Although in some cases, employees may call to clarify questions on the application. Answers to questions will increase the chances of approval of the application.
Banks may require to apply for a loan (except for an ID):
- employment certificate;
- income statement;
- bank statement about the deposit presence.
When applying for a loan, consultants are often asked to show a second document with a photograph, for example, a license.
What Can Increase the Chances of Getting a Loan?
If you have guarantors, you are ready to leave the property as collateral or insure yourself in favor of the bank, then the amount of the loan may be even greater. After all, the bank takes less risk in this case. Moreover, the decision of the creditor may be affected by:
- A positive credit history which serves as an additional confirmation of the solvency of the borrower;
- Lack of hidden loans, arrests, and encumbrances of movable and immovable property;
- Providing documents confirming the presence of assets in the property. The pro is the assets that the client acquired at their own expense or on credit (cars, equipment, other movable property, apartments, houses, land, deposits, business share, etc.).
Proof of your living situation can help a lender determine how stable your lifestyle is. You can usually use one of the following:
- lease or rental agreement;
- utility bill;
- proof of insurance on your home, lease/rental, or vehicle.
This increases the lender’s risk and makes it even more important for them to verify you have a steady source of income to repay the loan. You can usually verify your income with the following documents:
- w2s and 1099s (some lenders will ask for the last two years of W2s and 1099s in addition to, or in place of, tax returns);
- paystubs (usually the last two);
- bank statements (usually at least two months);
- tax returns (usually the last two years);
- some lenders may ask for your employer’s contact information.
Your salary, pension or scholarship is not always required to be documented, but income is usually required. The maximum loan amount depends on this. The higher your income, the more credit you can repay.