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Is it true that whether a person would? • Make a loan repayment on time . • Or would default on payments Depend on4 factors. They are • Number of years at the present address. • Number of years at the present job • Whether the applicant owns his own home • Whether the person has a fixed deposit of saving account with the bank.
In 3rd world countries credit rating agencies for individuals are not that active. Also the credit card culture where you spend by taking a loan is not akin to traditional Indian culture and the habit is picking up slowly. So in the absence of any credit history the above statement holds good . Also when a bank has a big fixed deposit in the name of the loan applicant the loan can be easily granted. It is common for service holders to take a housing loan even if they have the amount in bank fixed deposit as they do not want to break the FD. And there is a tax rebate on loan taken for house building.
So I fully agree with what Mr Allana has said.
NO, the loan repayment or default never depends on the stated factors. However, it can only depends if the the loaning agency is having lien over his deposits or having mortgage over his home or having standing instructions for deductions from his salary by the employer.
The facyors which can effect a loan transactions are :
Ability to pay
Willingness to pay
We can judge ability to pay through his emplyment records or financial statments of a company wheras willingness can only be judged from his past records pertaining to certian financing or his performance during discharging a current loan.
Yes, its true, the above factors clearly states your own credit worthiness and financial stability.
Yes , these factors are considered.
But masinly, the income of the persons.
His repaying capacity.
collateral security given.
coapplication / guarantee.
Employment proof .
Permanence in the employment.
The most fundamental characteristics most prospective lenders will concentrate on include:
your credit history
your cash flow history and projections for the business
your collateral available to secure the loan
your character
myriad pieces of loan documentation that includes business and personal financial statements, income tax returns, a business plan and that essentially sums up and provides evidence for the first four items listed
