Money is one of the most valuable sources for a person but the process of getting it tends to be complicated. So, if you need a big sum of money right here right now it is reasonable to turn to the bank. Unfortunately, your request can be rejected. There are several reasons for the rejection. Let’s try to avoid them.
Decide what Kind of Loan to Get
The very first step is closely connected with understanding your goals. Try to figure out what exactly you need money for. Here are some of the standard types of loans.
- Auto loan
- Business loan
- Education loan
- Home loan
- Personal loan
The key idea in this case is to take a loan exactly for your purpose. In other words, if you want to buy a house, you need to get a loan designed for this kind of acquisition. However, if you seek for something specific, personal loan is your best bet. It offers much wider opportunities.
Figure Out Where to Get the Loan
Again the range of opportunities can be limited by the offers of the bank. Some banks do provide money for buying a house but do not deal with auto loans. Some banks offer business loans or student loans which is another factor to think about.
If you are a student, then try to use a student association to help you find the right bank. Another good idea is credit unions which will give you several tips on where to find your creditor. A specific kind of loans is online sources. The good thing here is that you can get money fast. Be sure to check the reputation of the source otherwise you may end up being in debts you are not responsible for.
The most dangerous thing in the aspect of borrowing money is payday loans or rent-to-own programs. In this case you will get the money easily but the disadvantage is that you will have to return too much. These people are really dangerous and they will do their best to earn on your trouble.
Credit before Loan
Speaking in general you are seeking for a loan which means that you need to have a good history of borrowing money somewhere else before. Thus, you need to get a credit. A good idea is to borrow money somewhere else and successfully pay it back. The good idea is to borrow a small sum of money. Thus, you will create yourself a good reputation.
If you want to check whether you are an attractive borrower or not, there are several resources which will help. All of them are free.
In case you have never tried taking out a loan, you are not likely to find much information there. To fix it try getting a moderate credit to build yourself a good history.
Details of the Loan
It is very important to understand every detail of your loan before you get it. For example, try to understand how you are going to repay it, the costs of the interests, whether you are going to pay it electronically or physically.
In addition, it would be sensible to use loan calculator first. It will help you understand the amount of the money which you will have to pay for the loan. There are a lot of useful tools on the Internet which provide such services. You can also visit websites of the banks. Most of them have such a calculator.
Understanding you possibilities before getting a loan is very important. Otherwise you may end up being unable to pay off your debts. This is called a debt to income ration. To put it simply you should figure out which part of your income you are ready to pay.
Go to a Lender
Once you have completed all of the steps described above you can go to the lender. In fact, this is quite simple. All you need to do is to tell your lender that you would like to take out a loan. They will ask several question concerning your income, your marriage status as well as the purpose of the loan. They will explain you further steps.
At this stage you are likely to be asked to prove information about your income and so on. In most cases you need to provide your identification, Social Security Number and information about your income.
Now you have the status of a potential borrower. Usually it takes several weeks to change this status but the decision depends on the sum of money which you are going to take. During this period lenders may call you to understand details and clarify something.
If you apply for a business loan, you have to go through similar process in general. The unusual aspect is that a new business is not likely to have a borrowing history. Neither do their owners have assets. As a result, it can be difficult to get a loan in this case.
As you can see taking out a loan is not really that complicated but you still have to follow several rules in order to get it. Things mostly depend on your income and the information which you can provide. In some cases you can get a refusal from a bank which means that your income level is not high enough or your credit history is not reliable. What to do in this case? You can find the answer in our article which describes this situation in details.