Once in a while a moment occurs where you need money that is not in your bank account at that time. You want to buy a new car, buy a house or finance your vacation. But how do you ensure that your loan application is actually approved? Read below the 6 tips from OneTopNotch to optimally prepare your loan application.
1. Make sure you are not on the black list of the BelBank
If you do not pay off your loans on time, this may result in a blacklist. When you are blacklisted, it is impossible to request a new loan. Even when you have paid off all your loans, you will remain on the list for 12 months. If your debts accumulate and you cannot pay them off, you remain on the list for 10 years. For more information you can always consult our article.
2. Pay attention to your profile
It is important that you can prove that you are handling your money well. With the loan application, the bank will always view your profile. Therefore, you should, for example, not be caught 6 months before submitting your loan application for not paying back your bills. If your monthly income is not high, try to show that you are able to save. If, on the other hand, you have a high income, then show that you do not spend all your money directly.
When you have recently graduated or just started a new job, getting a loan will be harder. If, despite these circumstances, you are able to pay off your monthly bills, you still have a good chance.
A good rule of thumb is that your monthly charges on all your loans do not exceed one third of your net monthly income. After all, it is important that you also have money left over for your daily expenses and small unexpected costs left and right.
3. Make your own contribution
This point can be very important in, for example, the loan application for a mortgage. The higher your own contributionto the loan, the higher the chance of acceptance and often the lower the interest. The own contribution can for example consist of savings, the proceeds from the sale of your old house or a donation or inheritance.
The chance is small that you will receive a mortgage loan with an contribution of less than 10% of the purchase amount. The bank assumes that you can pay at least the registration fees from your own pocket (10% in Flanders and 12.5% in Brussels and Wallonia). A good rule of thumb is to be able to pay 20% -40% of the total purchase price with your own resources.
4. Balance the duration with the interest
During your loan application it is important to find a good balance between the term of your loan, the monthly installment and the interest. On the one hand, you will often pay a higher interest rate for the same amount if you borrow over a longer period. On the other hand, the same loan over a longer period has the advantage that you have to repay lower amounts every month. It is best to look at the monthly repayments to which you are able to choose the duration of the loan.
5. Choose the correct bank
Every bank has its own credit policy. Therefore feel free to compare the various banks. You will realize that some banks fit your profile better than others. In addition, certain banks specialize in certain financial products with very competitive rates, such as car loans and less on others.
With our comparison tool you can compare all loans on the Belgian market and see which loan suits you best.
6. Suggest a guarantor
If you fail to win the bank’s confidence, you can always ask a family member or loved one to guarantee your credit. There are different forms of guarantee:
- Ordinary guarantor: if you are unable to pay off your debts, the creditor will initially recover from yourself. The creditor will only turn to the guarantor after he has not been able to obtain recovery from you.
- Joint and several guarantor: the principal debtor and the guarantor are on an equal footing. The creditor can request the entire claim from you as well as from your guarantor, without the creditor having to prove that you are insolvent.
- Indivisible deposit: different people stand surety. The borrower has the right to request the full sum of the loan from one of the guarantors.
- Limited deposit: the amount or duration of the deposit is limited.
- The mortgage surety: in this case, the surety, for example the parents of the son or daughter who wants to apply for a loan, can grant a mortgage on the house as a guarantee.
Submitting a loan application must be a well-considered decision. After all, you must be sure that you can repay your loan. To find the best loans for which you are eligible, you can use our comparison tool.