All standard loans are credit obligations of individual borrowers. If a borrower incurs additional debt after being granted a loan from Bondora, the additional debt may adversely affect the borrower’s overall creditworthiness, and could create financial distress for the borrower, or lead to the borrower’s insolvency or bankruptcy. Such circumstances could impair the borrower’s ability to make payments on the loan and the investor's ability to receive principal and interest payable on the loans that are comprised of the standard loans. To the extent that a borrower has or incurs other indebtedness and cannot make full payment on the aggregated indebtedness, the borrower may choose to pay other creditors rather than to Bondora. If a borrower incurs other indebtedness that is secured, such as mortgage, home equity or auto loans, the ability of secured creditors to exercise remedies against the assets of the borrower may impair a borrower’s ability to repay the loan on which investor's investments depend for payment. Because the standard loans are unsecured, borrowers may choose to repay other obligations before repaying loans arranged by Bondora because they have no collateral at risk. The investor will not be made aware of any additional debt incurred by a borrower, secured or otherwise.
Bondora has income and expense verification policies in place that are designed to mitigate the risk of lending to overindebted borrowers. The policies incorporate certain limits and take the affordability of each loan into account. Our credit policy has additional rules regarding the parameters of the loans that the investor can buy.