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Applying For a Bank Loan

If you are applying for something like a signature loan, mortgage loan or business loan you may be applying directly with the bank or through online applications.


Talk with A Professional

Make an appointment with a loan officer at your bank. Sit down with them and discuss the type of loan you are seeking, what your goals are and a bit about your financial situation. The loan officer may be able to give you guidance and offer options you had not considered. You may be able to get a realistic estimate of the chances your loan will be approved.


Provide Your Information

One of the first things you will be asked to do is fill out a credit application. The application is the banks method of gathering demographic, income and credit history information about your.

Be prepared to give information such as:

🎖 Name
🎖 Address and Phone Number
🎖 Date of Birth and Social Security Number
🎖 Employment Information such as name of employer and length of employment

There may be other questions depending on the institution’s internal policy and the type of loan.

The Bank Analyzes Your Information

Using your applications a baseline the bank proceeds to investigate and determine how much of a risk would be involved in loaning to you. Their procedures may look something like this:

🎖 With your name, date of birth, address, and social security number a credit report and/or credit score is requested from the credit bureau(s).

🎖 The bank reviews the credit report to see how long you have had credit. If you have no prior credit it is difficult for a bank to assess the level of risk in loaning to you so it may be denied. The longer the length of credit the more ability the bank has to see how you have handled repayment of credit over time.

🎖 Your credit score is based on a formula that meshes’ lots of data about you and creates a number that immediately tells the bank how much of a risk you are. Know your credit score.

🎖 The credit report lists ‘inquires’ from companies you have applied for credit with. Lots of inquires are a bad indication, as it appears you are constantly shopping for credit.

🎖 If your credit report shows slow payments, late payments, unpaid collection items and so forth you will be considered a very high risk.

🎖 Your length of time on the job is a consideration because the bank wants to feel you have a reliable source of income to pay debts with.

🎖 The bank will look at your ‘debt-to-income ratio’. They want to know what percent of your income is already committed to paying debt. This is a good indication of whether you can afford the loan. Know your on debt-to-income ratio.

🎖 How long have you lived at your place of residence? The bank wants to know if you are fairly stable or do you move around a lot.


The bank completes its assessment and takes one of the following actions.

🎖 Notifies you that the loan has been approved. In this situation you will be required to sign certain loan documents that set forth all terms and conditions of the loan. You will then receive the loan proceeds (money) or the asset obtained with the loan.

🎖 Notifies you that the loan request will be taken to the next loan committee meeting. The ‘loan committee’ is usually made up of bank officers who meet periodically to hear presentation of loan requests that are either marginal, must go before the committee due to the size of the loan, the loan amount exceeds the loan officers cap for approval, or various other reasons. The committee hears the loan requests and votes to approve or deny.

🎖 Notifies you that the loan request has been denied. In this case you should receive a document called a Notice of Adverse Action that will provide further information about the denial.

Do your homework before applying for a loan. You should be able to get a fairly accurate idea of whether you will qualify or not.

Article Source: EzineArticles.com

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Apply bank loan are not easy task, it take time to complete it.

When Is Applying For A Bank Loan Smart Choice?

Enough Income To Repay Within Tenure

When you apply for the bank loan you will be required to repay the loan back with an added interest. In some cases, you will also need to pledge a security, which is of equal value to the loan. These securities can be in the form of houses, gold items or jewellery, equity goods and many more. Additionally, you will need to repay these bank loans within a stipulated tenure. If you fail to repay the loan within the time frame, the bank or financial institute will claim the security in lieu of the loan. In such cases, the loss of this security can lead to more problems. However, if you have sufficient funds in the form of income, you can easily repay the borrowed funds without any issue.


Good Credit Score

A good credit score is a requirement for any bank loans or banking card application. When you apply for the bank loan or even any of the banking cards, the financial or bank institute will first look at your credit score. This credit score stands as proof of your previous financial history. A good score signifies that an individual has a good capability of his financial management and will easily repay the loan without defaulting on it. Therefore a good credit score equals to save investment in the eyes of the banking or financial institute. So if you have a good credit score, you can easily apply for this loan. One benefit of this factor is that, if you do not have the right level score, you can take the necessary steps to improve your score.


Enough Time To Research And Avail The Best Loan

In certain emergency cases, you will be required to apply for an immediate financial aid. In such a hurry to get the financial aid, you will overlook the important details that are concerned with this loan. There will be two problems regarding this issue. One, there is a high chance that the loan which you have applied for may only satisfy your current financial requirement, but will not be the best loan for you. The other problem is that, in overlooking the terms of the contract, you might end up paying huge amount in EMI’s at high interest rates well beyond your means. This will lead to more financial problems for you.

Artcile Source: Artipot.com
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