Why do loan companies require a salary certificate?
Earnings certificates are one of the documents required by banks. It is customary to think that if we need a quick injection of cash, it is best to go to a loan company, bypassing the banking bureaucracy with a wide margin. Indeed, most such companies are able to fulfill the wishes of their customers even in a quarter of an hour.
However, there are also those which, with higher amounts of liability, require borrowers to submit a number of documents, including a statement of earnings. Let’s try to find the answer to the question, where does their penchant for banking procedures come from?
Statement of earnings
Although it is said that ladies and gentlemen do not talk about money, and the amount of remuneration should not be the topic of their talks, there are situations when it is necessary to lift the veil of secrecy. One of them is shopping in installments and applying for a loan. The lender depends on knowing the client’s professional situation, the type of contract under which he works and information on the achieved revenues. Thanks to this, he is able to estimate whether he has a chance to meet his obligations on time.
The second issue is the loan amount that the borrower is applying for. Knowledge of the amount of remuneration will help you assess whether it is too high. In these cases, the wrong diagnosis will be painful for both sides: the financial institution will lose time to enforce debt repayment (if the case reaches the court stage, it may take years) and the debtor will eventually pay far more than what he requested.
What should the pattern earnings certificate contain?
There is no single correct form for the income statement to be made when applying for a loan. Forms of such certification are in possession of workplaces, accounting departments serving companies as well as financial institutions. Many designs can also be found online. What should be included in such a document? First of all, the employee’s personal data. It seems like a truism to many, but it may happen that the workplace omits this element, so that the entire certificate loses its validity and the procedure will have to be repeated. If we care about time, it is definitely worth making sure of it.
Next in line are the data on the type of contract signed under which the employee is employed and the remuneration he receives in this connection. Any annotation should also be included here if the employee has a debt burden – confirmed by the signature and stamp of the employer. From the borrower’s point of view, such information may seem insignificant, because ultimately he takes responsibility for paying the debt. However, for a bank or a loan company, the debt collection message may affect the financial liquidity of the future debtor. This, in turn, will be reflected in the loss of regularity in paying off the debt.
How to fill in the earnings certificate?
We, as potential borrowers, are not the ones to fill in our earnings certificate, so we check what is entered in it. The personal data mentioned above must include not only the employee’s name and surname, but also his PESEL number or the number and series of the identity card or passport. Employment information, which we wrote about above, should be saved in such a way that you can easily find out when the employee started working in a given plant, what position he holds and whether he is employed under a fixed or indefinite contract.
Contracts of indefinite duration are usually more welcome than temporary ones, which does not mean that a person working 2 years in a given company on a second annual contract is less likely to receive a credit decision. In this situation, much will simply depend on the amount of remuneration.
In addition, remember not to overestimate the power of the contract for an indefinite period and not rush to the loan company for a week after signing it, because it is assumed that such an employment relationship should last a minimum of 3 months. Until then, if we care a lot about getting the cash quickly, we will be left with nothing more than to choose a lender who does not require a salary certificate.