If you want to take out a loan for the first time, you will surely be surprised about some documents or requests so that the lender can approve a loan application and then pay it off. What is the purpose of a pay slip in this context and is there not also a loan without presenting this document? Read more about interesting details about the loan with a pay slip and what can happen if this document is missing.
Lending as a classic banking business
The profit and loss account of practically every bank consists of a few large categories on the earnings side. The interest surplus and the commission surplus play an important role. The income from lending arises from the fact that the bank purchases the money it lends at a lower interest rate and then lends it with great care. The bank has a gross interest margin in the low single-digit range available to cover all costs and also to be able to compensate for any value adjustments. And this is where payroll comes into play!
The lender must be able to estimate the probability of repayment
Anyone who takes out a loan with a pay slip signals that the bank has a good credit rating or provides information about its monthly income from non-self-employment. This enables the bank to carry out a much better calculation of the probability of repayment and the assumed monthly free budget. The bank calculates an excess of monthly income over the customer’s expenses and can estimate how easy it would be to repay the loan.
The bank also supplements this projection with its own experience, for example if you have a current account there or also the experience of other creditors through private credit checker information. In this respect, submitting a pay slip or a pension notification is a completely normal process. After all, it is a financial transaction in which the bank does not know in advance whether it will get all or part of the money back.
Due to the lower associated risk, the bank can also calculate the loan with payroll much cheaper than with little information or even a loan for the unemployed. therefore it is in the borrower’s own interest to provide this document.