Ecuador: these are the factors that banks take into account before granting a loan – 2024-08-05 11:42:23

2024-08-05 11:42:23

Credits allow you to acquire property, pay debts or meet different goals. However, accessing one is not so easy if you do not meet certain “requirements”. For this, there is an evaluation process carried out by financial institutions, this The process is governed by the well-known 5 Cs of credit.

What are the 5Cs that influence the decision to grant or not grant a loan?

1. Credit history: Banks review how the applicant has managed previous loans, including the punctuality of payments and possible incidents of delinquency in the last 36 months.

2. Payment capacity: The applicant’s ability to meet the payments of the new loan is analyzed, evaluating income, monthly expenses and other financial obligations.

3. Collateral: In the case of secured loan applications, the value of the asset offered as collateral is assessed, which can be liquidated in the event of default on payment.

4. Capital: In addition to regular income, savings, investments or other assets that the applicant can use to cover debt in the event of a financial emergency are considered.

5. Conditions: Banks also look at the purpose of the loan and the general economic circumstances that could affect the applicant’s ability to repay.

Each of these factors plays a crucial role in the final decision of the banks. Combined, they allow the financial institutions conduct a comprehensive risk assessment before granting a loan.