Financial Situation of the Borrower Credit Creditworthiness



Only a banking institution can provide credit to us. We can apply for a loan in a bank. Other non-bank institutions can not give us credit, only loans. The difference between these institutions lies primarily in where the money comes from, which they later sell in the form of a loan or loan. Banks have the right to collect money from other natural persons, legal persons and organizational units with legal personality. Non-bank institutions do not have such a right. If they want to borrow money, they must be their owner.



Banks, unlike non-bank institutions, have the obligation to check the creditworthiness of a potential borrower on the basis of documents submitted by the applicant. In addition, they must check the applicant’s credit history in the Credit Information Bureau. It is often the result of the Retrodatabase audit that determines that we will not get a loan. Non-bank institutions that grant loans are not obliged to do so. Therefore, getting a loan is easier. In a situation where we do not receive a loan because we do not have creditworthiness, this does not invalidate our chances for a loan. However, it should be remembered that the cost of the loan is much higher than the cost of the loan.



There are several things on the financial situation. In order to receive a loan, the type and period of the contract based on which we are employed are of significant importance. In addition, the amount of credit granted also determines the amount of our earnings. Theoretically, the more we earn, the more money we should get. It does not necessarily have to be reflected in reality. When assessing the financial situation of the borrower, the bank also takes into account the amount of the current debt of the applicant. At this point, despite high earnings, it may turn out that monthly expenses will be even higher. This fact may determine that the bank will decide that we are no longer able to pay another loan. The bank also asks the person applying for a loan to indicate previously taken credits and loans. Only the combination and summary of all these elements shows the bank a real picture of our financial situation.



The assessment of creditworthiness beyond the assessment of the financial situation of the borrower is also influenced by its verification in the Credit Information Bureau. At Retrodatabase, the bank primarily checks our credit history. At this point, it matters not only whether we have always paid our loan in full. Through verification at Retrodatabase, the bank also checks whether we repaid our loan installments in a timely manner. Even when our creditworthiness is sufficient, the bank does not have to, but it can give us credit. The premise for refusal to grant a loan may be the timely repayment of previous loan installments. The bank undertakes to provide us with a certain amount of money, but in return expects us to also comply with the contract. In this case, after verification at Retrodatabase, we are not credible for him. So let’s take care of your credit history.


How Do You Actually Get Debts?

Frequently, debt sneaks unnoticed, no one should believe that it can not hit him. Only a bit of carelessness coupled with bad luck, are enough to end up in debt. If you are in a financial dilemma, you often ask yourself, how do debts actually arise? In many cases, the so-called debtor career begins at an early age with the first checking account, which was overdrawn. After some time, the bank then addresses the customer to turn this overdraft into a loan and the checking account can be overdrawn again.

Mobile phone contracts help with the emergence of debts

Mobile phone contracts help with the emergence of debts

The offers promise a very low basic fee. On closer inspection, it is usually a significant burden that comes to the user every month over a period of two years. Big encores entice the mostly youthful users into further cell phone contracts. As a result, the ranking of Private credit for the user is very bad and loans are only to get a much higher interest rate. Thus, the debt spiral often begins to turn with the second mobile phone contract.

Installments should be treated with caution

Frequently, installment payments are agreed in good times. If you do not want to wait any longer for a new sofa, the big screen TV or a holiday trip, you will get an installment contract. Often, these are also offered with a so-called zero-percent funding. Thus traders offer enormous incentives to buy the goods immediately. As long as the buyer keeps his job, the partnership remains stable and no major illnesses occur, most installment contracts will take their regular course. But the wishes of the customers are constantly fueled by the advertising and the installment contracts pile up, precisely because the monthly payment amount is very low. However, several low sums are too much of a burden on the customer, especially in the case of sudden unemployment.

Get professional help

Get professional help

At the first signs of payment difficulties, the debtor should seek professional help. If possible, before the bailiff or expensive debt collection companies ring the doorbell, it is advisable to go to a debt counseling service. Of course, the situation for the person concerned is difficult to judge for themselves, but you should rather seek professional help too soon, as in private bankruptcy to end.

Responsible Budget Planning How Not to Get Into Debt

An effective form of protection against debts

An effective form of protection against debts

Debt does not mean the end of the world, but you should be aware that disregarding this problem at the beginning can lead to the creation of a real spiral of debts, and then we can already talk about serious problems. We live in times focused on constant consumerism, from all sides tempt us promotions and ensure that we can pay for something later – when? – it’s irrelevant, it’s important that it’s not now. Let’s add payment cards and we have a straight road to bankruptcy. Of course, people who can not manage their finances responsibly are susceptible, which is why it is so important to learn how to administer your own budget.

How not to get into debt?

How not to get into debt?

Avoid unnecessary expenses

Avoid unnecessary expenses

This is a banal advice, but a lot of financial reports show that many families around the world live on so-called credit. The installments calculated per cent are successfully paid, but only until – what about unforeseen expenses? A random accident, an increase in rent – these are situations that can not be included in calculations on a piece of paper, and fate can be cruel. We suggest that the budget take into account the part that we pay into a savings account – it can be even small sums, over time a decent amount of money will be collected that can be used to buy a dream gadget or invest.

The issue of all promotions looks quite similar – remember that installment payments do not mean comfort in the form of cheaper equipment purchase. We must pay for the whole, and sometimes colossal interest will come to this. The planning of such a purchase should include the calculation of the total amount that we transfer to the bank. Maybe you should consider postponing and buying something for cash? Another type of promotion, which is not in fact a form of saving, are those that rely on the purchase of a larger quantity of a given product at an apparently lower price. This usually applies to foods that we throw away more often because we simply buy it too much.

Carefully take out loans

Carefully take out loans

Short-term loans or bank loans are major liabilities that often lead to debt. It is strongly discouraged from incurring another obligation in order to repay the older, better to consider consolidation of loans in one bank and spreading payments into convenient installments, and then consistent repayment.

Remember that economical financial management, budgeting and purchasing planning are the basis for the economic success of every household. In short, it is a guarantee of avoiding debt and deferring a specific amount.

Is it Worth Using the Services of a Professional Loan Broker?

A professional loan broker

A professional loan broker

A professional credit intermediary is to represent the interests of a potential borrower. If we are not specialists in the field of banking operations and loans, it is worth asking for help to such a person. It is worth using the services of a professional loan broker not only when we do not know each other on loans, but also when we are trying for a difficult loan.

At every stage

At every stage

It is a person who will help us through every stage of the credit process. Starting from the beginning. Once we make the decision that we want to take out a loan, a professional loan broker will help us choose the best solution. It is worth using the services of a professional loan broker. Before you apply for a loan, she will conduct an accurate interview with us. We will professionally assess our creditworthiness and financial capabilities even before sending the application to the bank. Thanks to a professional credit intermediary, we will avoid sending unsuccessful credit applications to the bank. It should be remembered that three refusals to grant a loan by a bank may decide that we will not get a loan from any bank. From among all offers available on the market, it will choose the best and cheapest solution for us. It will help us to complete all documents necessary in the credit process. It will help you fill out and send our application for a loan to the bank. If necessary, he will negotiate for us with the bank, so that we as the borrower get the cheapest loan.

Specialization – difficult loans

Specialization - difficult loans

It is worth using the services of a professional loan broker primarily in the situation when we try to obtain a difficult loan. It is also worth knowing the concept. A difficult loan should be understood as one whose acquisition is difficult and sometimes even impossible. So it is not about difficulties connected with, for example, numerous formalities, but rather with our credit history and creditworthiness. When it seems to us that we do not have a chance for a loan in a bank, it is worth using the services of a professional loan broker. Above all, he will professionally assess our situation. Thanks to the possibilities of negotiating with the bank’s decision-making representatives, he can find a way out of the seemingly difficult situation and negotiate good credit conditions for us. Before you go for a loan that will give you much worse conditions, ask a professional credit broker for help.

Loan for debt repayment

If the salary is high enough and no further complaints are found in the private credit card index of a borrower, taking out a loan is generally not a problem. Many consumers succumb to one or the other lure with such good conditions, forgetting that the borrowed money, including interest, must be repaid to the bank. The danger of over-indebtedness is a constant companion against this background. Although the majority, but unfortunately not all, create the timely jump from the kosum, why the loan is considered inevitable for debt repayment in such situations. So that the debt mountain does not get even bigger, those affected should pay attention to a few little things.

Before the loan for debt settlement, the cause research is important

In many cases, the so-called disposition credit as the cause of the financial misery as the person responsible is located. Many current account holders use this option to raise money quickly and afford to buy goods that can not be fixed on their own in the medium to long term as part of a realistic view.

That the respective bank would like to have the borrowed money one day again, forget at this point most consumers in favor of the personal feeling of well-being. Due to the comparatively high interest rates, the bank usually lends itself a great deal of time with any repayment claims in this area. However, if this condition persists, the bank will write to the account holder in writing and demand that the existing debt be abolished.

At the latest from the receipt of this unpleasant letter, sufferers promise “redemption” through a loan for debt repayment. Actually, this is a very good idea. Other account holders often take this without thinking into the increase of the already exhausted and at the same time expensive disposition limit in their considerations – a thoroughly fatal error with high risk potential. Anyone who decides against a loan for the debt repayment at this moment ends up in an endless debt spiral that sooner or later ends in perplexity.

Well chosen dates for loans to settle existing debts

The loan for a debt repayment is used properly in time especially if it is to replace an existing, much more expensive loan. With this step, consumers save interest payments and can thus achieve a higher disposal on their own budget. In the case of a large part of all credit transactions, the interest rate is fixed over the entire term, which means that any interest rate cuts simply are not there and the debtor may be expensive under certain circumstances. The debt repayment loan can be an attractive alternative and provide real added value in the long run.

Note (special) conditions and perceive

Both in the case of an existing debt repayment loan and all other possible loans, potential borrowers should be aware of the terms of the financing in question. In addition to the possibility of free special repayment and the elimination of processing fees are just two of many examples of this area.

Special repayment could play a major role, especially in long-term debt reduction loans. Tax refunds or inheritances can massively reduce the debt volume in the shortest possible time in favor of the borrower. Such offers on the part of the banks also create for the borrower a not to be despised potential for saving a loan, which should contribute to the repayment of existing debts.

Take loan and give: debtor or creditor?

Since the beginning of the exchange and money transactions, there are people who have more goods or money than others. This is how credit transactions arose in the earliest times. Those who have more give something away to those who have less and get something bigger for it. In times of famine, periods of drought and war that is also understandable. But what drives people today to provide their money and why do others borrow this money?

All facts about the guide “taking and giving credit” at a glance:

  • Loans can be forgiven on the basis of social motivation.
  • With the granting of loans, a higher credit interest can be achieved than with traditional investments.
  • Private individuals take out loans because their capital is not sufficient to meet their consumer needs.
  • Companies can invest in lucrative projects with borrowed money.

1. Why lend a loan?

1. Why lend a loan?

Being a lender on the market sometimes has something to do with social thinking, for example, because you want to help a friend out of financial distress. Here one grants him then a credit, which lies far below the debit interest. People who have too much money may also benefit disadvantaged people with a low-interest loan.

But all in all, that’s the exception. Most lenders also want to make money by lending money themselves. Much like a store’s price tags work, lenders work with interest rates. Interest is nothing but the price of lending money. Therefore, the repaid amount is always larger than the loan amount received. Of course, this also compensates for inflation over a longer period of time. But most of the interest payments are the price that the borrower has to pay for the loan.

For example, assuming a loan of 20,000 euros, with a total effective interest rate of 8 percent, the borrower must pay 1,600 euros at the end of the term. This amount includes inflation averaging 2 percent. This depreciation would only amount to 400 euros after one year and not 1,600 euros. The difference of 1,200 euros is the price that the borrower has to pay for the loan.

Private lenders sprout up like mushrooms whenever the interest rate on investments in the market is particularly low. Credit interest is the price paid by a capital provider for the money, while borrowing rate is the price that a borrower has to pay the capital service for the money.

The comparison lags, but imagine the money as a raw material, which is bought by the capital service providers for the credit interest. To lend the money to borrowers, a certain effort must be made. The creditworthiness has to be checked, discussions must be conducted and bureaucratic effort must be made. This can be paid by the capital service providers through a higher borrowing rate. Like wheat, which only becomes flour when it is ground. Finally, the miller can pay for this.

Some lenders prefer to go the direct route and seek contact with potential borrowers. This can be done via credit portals. Here, borrowers describe their situation and hope to find sponsors. Innovative ideas can thus be promoted and under certain circumstances a longer-term cooperation is also created. Others simply need the money to buy a new kitchen and can not get credit from the bank for lack of collateral. Here, the risk for the lender is increased, but he may also demand interest rates that are higher than the market borrowing rate.

The span between having and debiting as motivation

Ultimately, the enlightened lender will only enter into loan agreements where he earns more interest than the providers of capital offer. Even if even a rational lender experiences satisfaction by doing a “good deed” and lending to unworthy persons, there is and remains a risk. Over the centuries, capital providers have developed strategies, models and concepts to protect against losses. The private person stands alone with his potential losses.

2. Why take a loan?

Taking out a loan can be necessary for reasons of necessity or can be a rationally calculated business. True to the motto “every good merchant has debts”, the motives can also be purely financial.

If private individuals have to resort to a loan, it is mostly because they pursue a consumption goal that they can not satisfy with their own funds. Simply put, these people like to buy a new stove, but the money they save is not enough, which is why they need to borrow money from a lender. Whether it really is a stove, a car or a house is irrelevant in principle.

Many lenders require the availability of equity to provide a loan. Hereby, the borrower must already have proven in advance that he is able to save and so far he has not had enough time to raise the full amount. If sufficient equity is available, other factors are reviewed before a loan is granted.

If, for whatever reason, credit institutions fail to provide credit, the borrower can look around the private sector. Theoretically, every person can take a loan. The question is only at what price, so how high the interest is. The higher the risk for those who give the loan, the higher the interest rate will be.

However, companies may also want to take a loan at low interest rates as they have invested in high credit interest. This is where the so-called opportunity costs come into play. Opportunity costs always arise if one could do something with his money that brings in a higher profit.

In practice, this may look like this: The company has an amount of 100,000 euros available which it should actually use to legally required formation of reserves. But at the same time there is an investment opportunity in which this amount would interest at 12 percent. However, borrowing money costs only 5 percent at this time. So the company lends the 100,000 euros for 5 percent and reinvested them for 12 percent. The result is an increase of 7 percent.

This example is very simplified and omits many noteworthy factors. However, to illustrate the reasons that speak for taking a loan, the explanations should suffice.

Accordingly, two motivations can be stated why private individuals and companies fall back on loans. On the one hand, the need is due to a lack of equity and, on the other hand, in financial calculations. The one needs the money to be able to afford certain things and the other wants the money to make certain investments!

3. Legal basis of loan agreements

Credit agreements are questions of the law of obligations. Therefore, loan agreements may be freely designed at the discretion of the contracting parties. The debtor is protected by § 138 BGB by broaching the immoral legal transaction of usury.

The lender has a few things to consider when lending.

You can find more information on how a loan agreement should look in the guideline “Credit agreement by means of templates, templates & forms for download”. In addition, here are important notes which factors must be clarified in advance in order to experience any nasty surprises. Essentially, this is the regulation of installment payments, what happens in the event of late payment and what collateral is deposited.

4. The conclusion: With credit agreements there can be win-win situations.

Credit agreements can bring benefits for both sides. In this case one speaks of win-win situations. This may be the case, on the one hand, when private lenders and borrowers know each other and choose an interest rate below the customary borrowing rates customary in the market and above the usual market interest rates. Companies can benefit from loans when better investment opportunities arise and at the same time the lender receives the usual market interest rate.

Concessionaires plan their own financing for credit debts

fiat dealer

In this note we are going to talk as we mentioned in the title, about the concessionaires that plan a financial of their own to avoid the lack of credit that the banks do not offer.

The new president of the employer’s association Faconauto highlights the need for credit to flow to avoid further closures of companies and the president of the Federation of Associations of Automotive Dealers proposed the possible creation of its own financial network between the points to sell members of the organization and leave the banks parked, in order to increase the flow of credit.

In the framework of the XXI National Congress of Distribution, organized by the employers of dealers, Roura stressed the need for bank credit to flow so that the points of sale have financing lines to maintain the business fabric of small and medium-sized businesses. Business. Roura said that banks closed the doors to SMEs and noted that there has never been a bank that has been closed by a concessionaire, although there are dealers that have closed due to lack of credit.

Therefore, it was recommended to study the possibility of forming a bank among the thousands of dealers, since only a capital of 18,000 euros is needed. Among its requests to banks, the head of the organization noted the possibility that guarantees are requested from banks by employers. In addition, he indicated that talks began with manufacturers and importers  to defend the sector.

The Maintenance of the Pive Plan that at the same time, the Government was requested to maintain the PIVE Plan for the whole of next year and it was recommended that it follow the example of the Obama Administration in the United States, which invested in recovering the automobile sector and for this reason in the car you have to bet hard. Roura said that from the Faconauto board work to solve the current situation that the sector is going through, although he pointed out that this is not enough, but they need the support and collaboration of all the members of the Federation and the rest of the actors involved..

In this sense, we opted for the union to get out of the crisis. On the other hand, it was ensured that dealers, manufacturers and importers have an obligation to go hand in hand, since they share many common objectives, although they demanded a greater effort from car brands to listen and help their distribution networks.In addition s and said it wants them to be heard and plan together for the potential market. On the other hand, the importance of after sales was highlighted and pointed out that we must change the widespread opinion that dealers have higher prices than other centers, while emphasizing that these are the ones that best take care of the car. Finally, regarding the Distribution Law, he assured that it will not be approved during this Legislature, although they will advance in the dialogue to resolve any problem within the sectoral table, created while the said Law was being processed.