Final answer:
To show proof of financial responsibility when seeking a loan, one should provide income source documentation, undergo a credit check, may include a cosigner, and offer collateral as security.
Step-by-step explanation:
When someone is seeking a loan, there are several ways to show proof of financial responsibility to a bank or lender, which is essential due to imperfect information the lender has about the borrower's ability to repay the loan. Firstly, the individual will need to provide forms detailing their income sources. Moreover, banks typically conduct a credit check to review the borrower's past borrowing and repayment history.
In addition to these methods, having a cosigner on the loan is another form of reassurance. A cosigner is someone who legally pledges to repay the loan if the original borrower fails to do so. Lastly, offering collateral—such as property or equipment—provides the bank with security, as it has the right to seize and sell these assets if the loan is not repaid.