Taking out a loan despite debt
For borrowers, the likelihood of a positive loan application increases significantly if there is no previous debt or other current loans. In fact, almost all debts tend to be interpreted as current loans, even if they were not originally created as loans.
After all, sooner or later both companies and private individuals will have to settle the debt, which will cause the debt to involuntarily assume the same characteristics as credit. If there is already debt, regardless of whether it is planned or unplanned, problems can arise for the borrower when taking out another loan. In this case, the bank must not only fear possible over-indebtedness for its existence, but even expect the bank to issue no further loans. Taking out a loan despite debt is also largely dependent on how much assets and income the borrower has to show.
Without a doubt, a high income also increases the chance of getting another loan, although non-liquid funds such as real estate can also flow positively into the loan application. When applying for a loan, the lender must then determine whether the borrower can be expected to take out another loan, which the borrower can also repay in full and on time. If there are any uncertainties on the part of the bank, they must question whether enough assets are available for attachment in the event of an emergency. Taking out a loan despite debt is only possible if at least one of these questions can be answered positively by the lender in accordance with their own guidelines.
The amount of debt also counts
Of course, financial debt is not the same as debt. The lender makes a clear distinction here, depending on how high the debt is or how long existing loans still have to be paid off. The type of debt is also crucial, because buying a car or paying in installments for a car creates almost inevitable debts, which are classified as such from the start and paid off over the specified period. In the evaluation of borrowing, debts that are actually not supposed to be or should never have arisen are much more negative.
These may not be on-time or unpaid bills from mail order companies, but also outstanding liabilities to service providers. Taking out the loan in spite of debt is therefore possible if the borrower can also prove to be reliable towards the bank. Unpaid bills and outstanding unplanned liabilities can quickly lead to rejection by lenders, even if the lender maintains loose guidelines for issuing a loan. In the end, it is always the individual case that decides, because lenders assess each borrower individually according to their requirements and financial situation.