As mentioned, it is very important to know what the key issues are for credit in our favor, so then we give to know the steps that you must know to perfection, to achieve your goals through financing.
Determination of the ability to pay
This refers to the financial capacity we have debt, i.e. liquidity. This is the key to determining your chances of covering your short-term debt factor.
To determine this factor, follow these steps…
- Gross income: You should consider all your income before taxes, i.e. your salary, commissions and other verifiable.
- Net Income: In your gross income, you must subtract taxes that apply to your personal activity, such as the Income Tax and any that apply to your personal activity; the result is what we call Net Income.
- Expenses: You must determine clearly what your expenses, and subtract your net income. It is very important to consider all your fixed expenses and variable averaging each month. Fixed expenses are for example: rent, food, clothing, education, transport, leisure, etc., and as very important, the amount shall assign to the savings, if you will imponderables. Variable expenses are e.g. holiday gifts, entertainment, social events such as anniversaries and birthdays.
- Ability to pay: The percentage that represents our surplus after deducting taxes and expenses to net income. All you have to do to determine this is to divide the surplus between your net incomes. As additional data, we can say that ability to pay is low, where that percentage is equal to or less than 10% of net income, and high when 30% is exceeded. This is the basis on which lenders determine our ability to obtain credit.
Basic documentation to apply for credit
- Credit Application (providing the lender).
- Proof of income.
- Official identification.
- Proof of address.
- Others, that determines each credit institution; and a socioeconomic study and / or research credit
What is a guarantor?
It is called “endorsement” to a form of guarantee. It is said that a person is endorsed by another when the former is committed to meet the commitments of the latter in case of a problem or failure.
Which it gives a guarantee warrants the obligation assumed by someone else.
Is it suitable to be guarantor?
Since that lends itself to be guarantor undertakes to meet the obligations of another, be endorsed entails some risks that need to be considered before accepting that commitment.
You need to take into account is to be endorsed, in a way, be part of the debt of another, since the pledge assets as collateral in case of not fulfilling obligations deadlines.
Many agree to be sureties without thinking about what they are accessing do and sometimes can be unpleasant surprises, so it is a decision you should think carefully.
In some cases, when we know very well to the person requesting the favor and we are confident that you have the capacity and willingness to meet its obligations could not be guarantees involve greater risk.
Can you give the commitment in any way?
It is not easy to give up being collateral, since by accepting to be, is under a debt contract with all the terms specified therein. In addition, the three parties: the creditor, debtor and guarantor must agree on any modification to the original contract.
What happens sometimes is that the guarantee can liquidate debt who asked the favor, in order that their goods are not disturbed, and to collect from externally.
In any case, it is not recommended to perform these actions as it can become complicated and troublesome, it is best to be sure of who and what the person is asking us as collateral.
How to decide?
- First we must consider the question of who is the person requesting us as collateral? We must consider whether this person has a good credit history, if you are responsible, if formal, if it fulfills its promises (of all kinds), and so on.
- Second, we must know about the kind of debt that you are purchasing. Since we will be certain “co-debtors” so we must make sure you understand all the terms and conditions involved in the debt contract. You need to get involved in the operation as your own.
- It is also important to consider our relationship with the person requesting the favor. We think whether it is an ancient and enduring relationship or just an isolated knowledge or passenger.
What if we already guarantees?
As we have seen, to decide to be endorsed, legally we acquire the same commitments as the debtor. So, it is best to be aware of the development of the debt.
It is essential to always be well informed about the progress of payment and debt relief and ensure that our supported is complying with the agreement. Communication in these cases is very important.
It is important to clarify that this article is only intended to introduce our readers to the issue of liability as guarantor, and not be regarded as any recommendation or advice.