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The Bank’s Considerations in Providing a Loan to a Private Customer – Avishai Vermouth – Post 1+2

The Bank’s Considerations in Providing a Loan to a Private Customer – Avishai Vermouth – Entrepreneur of the Week – Post 1+2

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When I started as an investor, the equity available to me was only NIS 100 and I raised everything else from the bank on a regular loan (SOLO loan).
I did not have any collateral or study funds to rely on, and the reason I was able to do so is only because I worked for 4 years at Bank Leumi in the field of private credit and I know in depth the bank’s credit considerations. Thus, I knew how to adjust my data to the conditions set by the bank.

Once you are familiar with the bank’s basic system of credit considerations, you can actually know in advance whether the bank is at your disposal and if so, more or less on what terms and what should be presented to the bank at the meeting where you apply for a loan.
Before we dive into the explanations, let’s start with an important tip – I want each of you to open his bank’s app for a moment and look at the lending category, if he has a suggestion there for what the banks call “automatic credit” or “click credit”.
Sometimes the bank’s system opens to the customer an automatic option to take a loan, which is immediately transferred to the bank account without the need for a bank approval or the branch. What is interesting here is that sometimes the terms of these loans can be completely not bad. * It is important that you pay good attention to interest rates because sometimes these are murderous and irrelevant interest rates and sometimes the interest rates are good interest rates.
After the tip, go to the main point:
So what are the bank’s considerations in providing an all-purpose loan to a private customer, which is not given against guarantees and collateral?
(* Such a loan that is given not against the provision of guarantees or collateral, but based on the customer’s condition and according to the bank’s considerations is called a SOLO loan).

The bank examines the provision of credit to the customer according to the following 5 criteria:
1. The nature of the customer – By and large, the bank wants to see that it is dealing with an ordinary normative person
2. Client capital and collateral – It is important to note that even if you do not have capital or collateral, this does not mean that it is impossible to get a loan.
3. Ability to repay – this is the critical part and I will expand on that here
4. Seniority in the bank and proper banking conduct
5. Customer age
In my explanation, I want to address the repayment capability parameter, which I think is the most important because once you know it and can calculate it yourself, you will understand where you stand in terms of the bank and whether you deserve a loan or not. That is, you will be able to understand more or less how much you can get and maybe you will also be able to make some small changes in the management of the account, which will allow you to get a loan exactly on the terms you are aiming for.
So how does a bank calculate a customer’s ability to repay a solo loan?
The key, according to which the banks work, is that the total fixed expenses will not exceed 40% of the total disposable income.

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