What Financial Institution Investigate When Granting A Loan?

Financial institution and the banks are two entities who provide loan against some interest and mortgage to a person who has applied for it. These pay on behalf of a person and then person is liable to pay back all the money to them within a given time period at specific rate. If someone violent the contract then banks and financial institutions have all the rights to take the possession of the asset as the person doesn’t manage to pay the money back.


Taking loan is not an easy task. A person who need it has to undergo a huge process then he is asked to come over and have a conversation with the management people so that they would know about him and then they make decision either he is the right candidate to grand a loan or not. It is not necessary that he would get loan in first attempt but he has to step in the bank for loan purpose a multiple time and sometimes the request gets rejected on the spot and no can help him.

The Main Features:

Following are few things that financial institution looks before giving a loan to a general public.

  • Needy:

They see if a person is really needy. Either he has applied to buy a car or to buy a house r to open up a new business, they investigate that he is really in need of money. His family is getting bigger and they do not have enough rooms that’s why he has applied for a loan.

  • Bankrupt:

They see that person is not a bankrupt. It means that often people take loans from bank and they are unable to pay off. To pay the previous loan they go to another bank and ask for loan. In this case, they are unable to pay off a loan of both the banks. Then, bank add them in the list of bankruptcy so that in future, no one will trust them and grant them loan.

  • Unemployed:

Financial institution grant money in favour of interest. They give money to the people for a specific time period and get premium in the form of interest. They investigate that if a person who needs a loan has guts to pay off the money in long-term. Either he has a job or unemployed. If he is unemployed then how would he manage to pay off the money of a bank and then they don’t grant loan to such people.

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