Lenders are looking for one thing. Will you be able to repay the loan after they give it to you? They are looking for symptoms that this will really happen. Questions they ask include the following: do you have a job? how much do you make? and how long have you lived here? Loan applications are designed to let lenders know if they can expect to get their money back.
Lenders loan money and they try not to give it away. Places that give it away are called charities. If you fall behind on your payments, you will learn quickly that banks aren’t charities. Lenders also like to look at your payment history. Some people pay every payment on time. Banks love these people.
Some people pay every payment. They’re just not really very picky when they get it paid. Banks kind of like these people because they get their money and make a little extra from late fees. Other people eventually pay the loan, but they have to chase them down to get it and end up writing off any late fees. Banks really don’t care much for these people.
The last group, make a few payments and move out of state. The bank will be fortunate to ever hear from them again. They will usually write off the loan and eat the losses. Banks hate these people.
Lenders believe that if you have a stable residence, job and good credit history that you are a reasonable risk. They like it when your assets outweigh your liabilities. Banks at least want the two to be close enough to wave at each other. If your liabilities are too high, you are less likely to be approved for many loans unless you have collateral and/or a strong credit rating. In the case of consolidation loans, the influence of these financial factors and others including income, varies between lenders.