Given the current economic climate in Romania, many people may need to access loans to finance various personal needs, such as renovating a home, buying a car or covering unexpected expenses.
In such cases, access to credit is largely facilitated by financial institutions, but in order to obtain a loan, applicants must meet certain conditions, including demonstrating sufficient income to repay the loan.
Thus, when it comes to borrowing an amount of €10,000, banking institutions can offer various loans to customers who are eligible, such as: mortgage loans, personal loans, car loans, etc.
- Mortgage loans – this loan is granted by banking institutions and is intended for the purchase of real estate; in the case of this loan, the guarantee of payment is made by the property purchased;
- Personal loans – a personal loan is granted to finance personal expenses, i.e. the purchase of personal property; loans of this type are granted according to the beneficiary’s income and ability to repay the loan;
- Car loans – are loans for the purchase of new or used cars.
In order to obtain a loan of €10,000, the minimum salary required by the banking institution for the loan to be granted may depend on both the institution in question and the lending policy. In most cases, banking institutions offer loans to people who have a stable income, i.e. are able to repay the loan.
When granting such loans, the bank or non-bank institution will consider several factors, including the applicant’s income, i.e. net monthly salary, to determine the applicant’s ability to repay. Among the considerations financial institutions take into account when granting a loan are
- Debt-to-income ratio (DTI) – this indicates the percentage of gross monthly income that goes towards paying off existing debts;
- credit history – a good credit score may compensate for a lower salary, while a poor score may require a higher salary to compensate for the risk perceived by the bank;
- job stability, consisting of a stable salary income;
- other additional income, such as rental income, dividends, etc.
It is important to note that the answer to the question of how much salary a person needs to earn in order to benefit from the €10,000 may differ from one institution to another. This is because banks and other non-banks have different lending conditions and interest rates.
In other words, the salary that the applicant for a bank loan must have in order to be considered eligible for a loan can be determined by using criteria such as interest rates, the repayment term of the loan and the conditions applied by the institutions.
By way of example, for a personal loan of EUR 10 000, where the effective annual interest rate is 13%, if repayment is made over 5 years, the minimum net salary required would be 2 700 lei.
Therefore, estimating the minimum amount of salary needed to obtain a loan of €10,000 depends on the specific conditions offered by the bank, including the interest rate and the repayment period, so that no general applicable amount can be established.
Also, as mentioned above, the income/salary of the applicant is not the only aspect taken into account by banking institutions in the loan approval process. Other elements such as job stability, credit history and current debt ratio also play an important role.
