Loan risk is blended with the borrower
Availing of loans is a prime need of many people across the globe. There are plenty of people searching for loan options through some means. Some people avail loans easily, and some are not. When we discuss loans, there are some risks associated with them. The loan risk factors are must be known to a borrower of the loan. A borrower who knows the loan risk factors are tend to act cautiously after or before obtaining a loan.
What are the major Loan risk factors for a borrower?
First of all interest rate for the loan is the major risk meant for a borrower. Hence, a loan borrower has to understand and calculate the interest rate he has to pay after loan disbursement. If the rate of interest is higher, he has to think of some other alternatives. Yes, another factor is the duration of the loan because some lenders only lend money for a shorter duration with higher interest. So, the borrower has to repay the amount in that time.
What lender has to consider before delivering a loan.
The loan risk factors of a lender are as follows.
The financial health of the borrower has to be taken into account before lending money to the lender. Moreover, the credit score of the borrower is also considered to a great extent by the lender. If the credit score is not good, then the lender has to take serious thought before lending a loan to a borrower. The credit score gives the history of the borrower and so the lender shall avoid bad credit score people.
Even a lender who does not consider credit score would have to check the repaying capacity of the borrower without fail. Poor repaying capacity is the major loan risk factor associated with the loan lending process.