Many different types of loans can be distinguished in the credit offer of banks. Among others, these are cash loans, included in the group of liabilities of any purpose. The customer can therefore use the money obtained for the purpose of his choice. It’s worth knowing who has the chance to get a cash loan. What income will make the bank agree to the client’s loan application?
What is a cash loan?
The legal basis for banks granting cash loans to customers is the Banking Act of August 29, 1997. In art. 69 of this Act, it was clearly indicated what should be understood as a loan agreement. Well, under the signed contract, the bank, acting as a lender, undertakes to make available to the borrower for the time specified in it the amount of cash for the purpose set.
On the other hand, the other party to the contract is the customer-borrower, who, when signing the contract with the bank, undertakes to use the obtained loan sum under the conditions specified in the contract and to reimburse it together with interest on the specified repayment dates. He must also pay a commission on the loan granted.
A cash loan is a specific type of liability from which the customer can use the money for any purpose. In this respect, cash loans resemble non-bank online loans.
Who will receive the cash loan?
Banks set specific conditions for clients who apply for a cash loan. No doubt such a person must:
- be of legal age, i.e. at least 18 years of age and full legal capacity;
- have sufficient creditworthiness;
- have a positive credit history at the Credit Information Bureau (BIK);
- submit an application for a cash loan on the bank form.
Most often the cash loan is unsecured, although there may be offers in which the bank will require the client to provide security, for example in the form of a surety from another person.
One of the most important conditions that a potential borrower must meet is having sufficient creditworthiness. This ability is understood as a predisposition to repay the loan, i.e. borrowed capital and interest, within the period specified in the loan agreement.
Of course, the monthly income of the clients influences the amount of creditworthiness. The higher the better, the borrower should not have too many financial obligations. When calculating creditworthiness, income obtained from various sources, depending on the bank granting the cash loan, is taken into account.
Along with the loan application, you usually need to submit a certificate of income, i.e. information stating beyond any doubt what the amount of monthly income is. This is the basis for assessing creditworthiness. For example, if a potential borrower works full-time, he will receive an income certificate from his employer at his request.
If you are a pensioner, you only need to provide your last pension or pension decision. The bank may also ask the customer for additional income confirmation, e.g. using a bank statement from the last few months. Sometimes it is possible to get a cash loan for a statement.
Banks usually check the assessment of the loan application and the customer’s creditworthiness, which is the DTI (debt to income) ratio. It is defined as the relation between earnings and installment of the loan obligation. In other words, DTI shows the percentage of debt to the borrower’s income. This ratio refers to the customer’s total debt that has been incurred and incurred so far.
The DTI level is determined by adding up the loans and dividing them by the client’s net monthly income. The DTI ratio is safe for banks when the amount of liabilities does not exceed about 30 percent. earnings. In turn, Recommendations of the Polish Financial Supervision Authority indicated that in the process of assessing the creditworthiness of retail customers, bank should pay special attention if the DTI exceeds 40 percent. for customers with an income not exceeding the average level of remuneration and 50% for other customers.
How much do you have to earn to get a cash loan?
Actually, no matter how much we earn, we can apply for a cash loan at the bank. The bank will independently determine the conditions for its granting, and the creditworthiness itself is assessed individually for each client. With low earnings, but at the same time in the absence of large financial burdens, the borrower has the chance to receive a loan.