How to Get a Loan

Here are some things to look out for when planning to apply for a loan.

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SO YOU WANT TO GET A LOAN

The first and most important part of getting a loan is identifying just what you’re going to be using the money for. There are a different kinds of loans that cater to specific needs. It can go as big as home loans for people who are looking into buying a house, startup business loans, to credit card loans for purchasing appliances or financing education.

The availability of loans is no problem since they can be availed in most banks and lending firms. The thing you must understand is how to properly prepare for your first loan application.

HOW MUCH ARE YOU WORTH?

It’s important to have yourself checked in terms of financial capacity. Checking your total assets, monthly income, credits, will help determine an estimated amount of money the institution can lend you based on your current financial status and paying power, as noted by Fitz Villafuerte in the Avida Financial Journal.

Here are some things to look out for when planning to apply for a loan:

GETTING PREAPPROVED

Having yourself prequalified is different from being preapproved. Being preapproved means you have provided all needed evidence needed to prove that you have the capacity to pay the loan you’re applying for. These documents include your bank statements, proof of income, employment records, your tax records and other documents that your lender may ask for to verify your capacity to pay. Make sure you have all these needed documents when preparing to apply so as to make the process as painless as possible.

HAVE A CLEAN BANK RECORD

The nature of loans is lending money. And obviously, people with clean bank records —meaning you pay your debts and dues on time— have higher chances of being approved for a loan. Having a credible and outstanding credit rating is a good start when trying to borrow money for the first time.

CHECK YOUR OPTIONS

Don’t jump into the first loan you find—make sure you compare rates between different financial institutions before making a move. Most banks have online facilities to get the updated estimate on the offered loans. You can’t go wrong in researching different banks before you apply.

Despite the seemingly intimidating requirements around acquiring a loan, remember to keep an open mind. It’s through your early investments that you’ll enjoy and find growth in your life.