How to get a loan
The process of pursuing and securing a loan is a relatively straightforward one, however it does require thoughtful preparation and adequate research. There are several steps involved when pursuing a loan, and none of them should be skipped.
Of course, no one wants to get turned down for a loan, but when approved, it is also crucial to make certain not to pay too much in interest expense and associated fees. This article will examine the proper course of action that anyone pursuing a loan should take in order to enhance the probability of a successful outcome.
Get The Loan You Need
For starters, it is important to consider the various available loan options and gravitate toward the one that is most suited to your specific needs. Many loans are earmarked for specific purposes – it simply does not make sense to apply for a personal installment loan, for instance, when you are in the market to purchase an automobile – as auto loans are designed with that purpose in mind.
Similarly, home mortgages, student loans, small business loans, and home equity lines of credit are all designed with specific use purposes for the funds granted. Additionally, interest rates, payment schedules, loan duration and other terms are all subject to the type of loan involved and can vary considerably by loan type and lender.
Get Your Credit Score and Credit Report
The practice of building and maintaining a healthy credit profile is a long-term habit that should always be tended to properly, but it is especially important to know where you stand prior to pursuing a loan. Get ahold of one of your three free credit reports at annualcreditreport.com and scour it for any errors or discrepancies that could be harming your credit score.
Hopefully, you’ve been paying your bills on time and maintaining a credit utilization ratio under 30% (this is the percentage of available credit that you have actually borrowed) while keeping your accounts open (even those that you don’t use – unless they have high annual fees) and enhancing the average age of existing accounts, thereby lengthening your credit history. Tighten up any loose ends that can elevate your credit score before shopping around for the appropriate loan.
Given the increasingly digital age, there are a now a wider variety of lenders that transcend traditional banks and credit unions, as well as a number of online tools that make it easier to research various loan options.
Online lenders, peer-to-peer lending platforms and lender comparison websites including LendingTree.com, LendingClub.com and GoCompare.com make evaluating various loan opportunities more accessible than ever. Criteria such as interest rates, loan duration, monthly repayment amounts and terms, loan maximums and minimums, and any prepayment penalties are all available for your view and consideration.
You can also utilize an online loan calculator to calculate monthly repayment amounts on a loan, as well as an online amortization calculator to illustrate how much of a given monthly repayment amount is allocated toward principal and interest expense throughout the duration of the loan.
Prepare the Loan Application
The application process will vary across loan types, although there are certain commonalities that you can expect to encounter regardless of the loan you are pursuing. For starters, each lender to whom you submit an application will conduct a “hard pull” of your credit report, an action that slightly negatively impacts your credit score.
For this reason, it is important not to submit an excessive number of applications, especially within a short period of time. Narrow the field down to your top three choices, and don’t submit applications in quick succession, regardless. You can expect to provide necessary documentation including a drivers license, social security number, proof of employment, proof of income, bank statements, and comprehensive list of existing debt. Once the lender has received all necessary documentation, the application is submitted for review and the next phase – the underwriting process.
The Underwriting Process
During the loan underwriting process, the potential borrower’s credit is verified, documents are reviewed, questions are asked and clarified, and a decision is ultimately made by the lender. Underwriting can take anywhere from one day to several weeks, with certain loans (such as a home mortgage) taking longer than others.
When a loan is approved, the borrower should always review the contract and be crystal clear as to interest rate, loan duration, repayment terms and any potential fees and penalties associated with the loan. When a loan application is rejected, you can always ask the lender why it was not approved – and it will often be due to an inadequate income level or insufficient credit history.
Though a co-signer can sometimes make the difference in ultimately securing the loan, it is also wise to strengthen a credit score and income level prior to submitting subsequent loan applications following a series of rejections, in the event that they occur.
Are you in debt? we can help
Handling my business debt was not something I looked forward to
Handling my business debt was not something I looked forward to. But United Settlement was so patient with my questions and helped me figure out how to handle my debt as a small business owner. I qualified...
I didn't even know what type of interest rates there were and how those affected my debt overall
When I contacted United Settlement, I didn't even know what type of interest rates there were and how those affected my debt overall. So, when I went to go buy a new house, I was shocked to find out that...
Debt settlement is what we signed up for when we were interested in using United Settlement
Debt settlement is what we signed up for when we were interested in using United Settlement. We needed a company to negotiate on our behalf to help us reduce the total amount of debt we owed, and we were...
I had no idea that I could lower my credit card interest rates. But when I contacted United Settlement, they explained to me that I could negotiate my interest rates down lower along with my payoff balance....
If you have ever had an unmanageable amount of credit card debt
If you have ever had an unmanageable amount of credit card debt, you know how ridiculous it is to try to pay it off. In my situation, I did not want to wait until the last moment to get this debt under...
Medical debt is damaging to your long-term credit
Medical debt is damaging to your long-term credit. That is what we were dedicated to managing our debt as soon as we got our medical bills from an unexpected surgery that our insurance did not cover. I...
Finding a good alternative to business debt relief is far from easy
Finding a good alternative to business debt relief is far from easy. As a company, we have spent years trying to find a good solution to our business’ debt, because if we can get it out of the way we...
I had no clue that a debt consulting company could provide guidance
I had no clue that a debt consulting company could provide guidance and what type of loans you should take out. I was thrilled by the communication I had with United Settlement. They did not hesitate to...
Buying a new vehicle should not stress you out to the point that you cry every night to go to sleep
Buying a new vehicle should not stress you out to the point that you cry every night to go to sleep. But that was the point I was at before I contacted United Settlement. These guys were professionals at...
I knew I needed to file bankruptcy before I even contacted the team at United Settlement
I knew I needed to file bankruptcy before I even contacted the team at United Settlement. My biggest issue was how to file and also what type of bankruptcy I should file. A lot of people do not know that...
Who would have thought that auto loan debt can take such a toll on a family
Who would have thought that auto loan debt can take such a toll on a family? Well, we discovered how that could happen when our family bought two new vehicles. We thought we could afford the payments, but...
Why go bankrupt when you do not have to?
Why go bankrupt when you do not have to? That was my thinking when I decided to hire United Settlement. I wanted them to help me get out from underneath my credit card and auto loan debt. They were very...
Who knew that you could get credit card debt relief
Who knew that you could get credit card debt relief just by reaching out to a credit card consolidation company? I did not. But I had a friend recommend United Settlement to help me get through my debt...
We had a revolving credit card debt that just wouldn’t quit
We had a revolving credit card debt that just wouldn’t quit. This in turn made it difficult to try to buy a house. Our credit card debt literally held us back from moving forward in life. But our goal...
There comes a time when you realize you need help with your debt consolidation
There comes a time when you realize you need help with your debt consolidation. And that time came for me last year. I contacted United Settlement to help me manage my debt issues. They were friendly and...
Small business loan debt was crippling our company.
Small business loan debt was crippling our company. We have spent many years building our business, but we had to take out several loans to get through a slow period. Fortunately, those loans helped, but...
If you have ever run a business before, you know how quickly you can get into debt
If you have ever run a business before, you know how quickly you can get into debt. That’s right, you can be trying to live your best life and end up in a situation you cannot get yourself out of. That...
Our credit card interest rates were astronomical
Our credit card debt was not really that bad, but our credit card interest rates were astronomical, which meant we could not get out from under our debt as quickly as we would have liked. We used United...
I had no idea that I would qualify for business debt consolidation loans
I had no idea that I would qualify for business debt consolidation loans. But United Settlement walked me through what that process was like and gave me insight into how to manage my future debt so that...
The last thing I wanted to do is file for business bankruptcy
The last thing I wanted to do is file for business bankruptcy, but that was before I knew how common it was and how little it actually affected my personal credit. United Settlement informed me of that...