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How do loans work?

When you’re asking a financial institution for a loan, you might want to know how the loan process works. Just use the 5 C’s:

  • Character 
  • Capacity
  • Capital
  • Collateral
  • Conditions

Numerica’s lending decisions are made locally and on an individual basis. We have branch lenders in the Tri-Cities, Spokane region, Wenatchee Valley, and North Idaho.

So, how do loans work? Here’s what we look at when it comes to saying yes to your loan.


Numerica is committed to serving people – not just people with perfect credit scores. Knowing our members, having an understanding of how you manage your money, and understanding your needs helps us to be a part of fulfilling your dreams.

We don’t judge, we partner.

Some things we look at before giving credit:

  1. How you’ve paid various credit in the past
  2. Your employment history
  3. If you’ve had credit in the past
  4. Your long-term financial goals
  5. Steps we can take together to improve your credit
  6. Your overall relationship with Numerica

For members we might not have known as long, credit scores offer an overview of lending history. There are five main factors that make up a credit score.

Your credit score is a number ranging from 300 to 850 that indicates how likely you are to repay debt based on past behavior. This number helps tell the story of your relationship with credit in the past.

It starts the discussion between you and your lender about borrowing money. Take a look at some helpful tips on improving your credit score.


Capacity takes into account your monthly income and compares it to your monthly debt.

Capacity asks the questions:

  • How much can you really afford?
  • How much more debt can you add and still be able to make payments?
  • Can you afford to pay back the new debt?

If your monthly debt is too high, lenders may have concerns about your ability to repay the loan, which could prevent your loan from being approved.

Speaking of debt, did you know student loans are typically counted as debt, even if they are deferred? Make sure to consider this when thinking about applying for a loan.

When it comes to credit cards, it’s a good idea to keep about 70 percent of your card balance free versus maxing it out. Relying too heavily on credit cards may indicate you’re struggling to live within your means.


Capital is the amount of money you have in other assets like investments, your savings, and any property you may own. While your income is the primary source of repayment, capital help builds your “net worth” and could potentially be used to pay your loan.

The more assets you have, the less risk you appear to have when applying for loans. Especially if those assets are things like Money Market accounts or stock that can be easily converted to cash to help make payments.


Maybe you’re on the cusp of being able to get a loan. Using collateral means you’re pledging a specific asset as repayment of the loan if you are unable to make payments. Collateral is most often used when you are applying for a line of credit or a secured loan (such as a car or home loan).

When you use collateral to secure your loan, lenders will look at the value of your collateral – car, house, etc. - and determine if it can be used to pay off your loan if you default on the loan.  Collateralized loans typically come with lower interest rates than unsecured loans.


There are additional lending factors that are beyond your control. Conditions include things like the current state of the market, interest rates, cost of living, etc. These are additional considerations in getting a loan.

The length of the loan is another consideration. A longer loan period can mean a lower monthly payment, but it also means there are more opportunities for default. 

While there are benefits to being able to pay off a loan quickly, such as a lower interest rate, everyone’s financial situation is unique. Loans are not one-size-fits-all.

This is a key reason why working with your Numerica team is a real benefit. We work with you to find the best lending solution for your needs and budget.

Find the right lender for your needs

Don’t add a sixth C — confusion — to this list! The application process for a loan can have a lot of moving parts. Don’t let that overwhelm you. And don’t let your doubt about the qualification process stop you.

Whether you’re looking for a personal loan, a home loan, a home equity line of credit, a car loan, etc. Numerica has a loan to fit your needs. Let’s work together to make your dreams a reality.

Find the right lender by stopping into your nearest branch or give us a call at 800.433.1837 today.

Find the loan that works for you.

*All loans subject to approval.

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June 22, 2024