Formulism

  • Increase font size
  • Default font size
  • Decrease font size
Home Banking Loans How to Get Loans

How to Get Loans

E-mail Print PDF

Borrowing money can help you do things, but it can also be complicated. If you need money, find out how to get loans and how they work. Learn the process so you know what to expect and what you can do ahead of time.

 

Understand Your Loan

Before you get a loan, make sure you know what you’re getting into. Borrowing may make your life easier, but you can also get into trouble. Learn how loans work, and figure out if you can afford the payments before you buy. Remember that the money you spend on interest is gone for good.

 

Choose a Lender

You’ll need to decide who to get a loan from. In some cases, you don’t have much choice - the loan may be part of whatever you’re buying. Otherwise, you can visit with a variety of lenders - banks, credit unions, online lenders, mortgage brokers, and so on.

The type of loan will also affect who you borrow from. Not everybody offers home loans or RV loans, for example.

Whatever your choice, ask a lender how to get a loan and what your options are. They’ll provide paperwork and let you know what it takes to qualify. Credit unions are generally a good place to start, and banks may advertise some great deals to drum up business. Cover all the bases by comparing their rates to online lenders.

 

Submit an Application

You’ll have to apply for a loan by providing information about yourself and agreeing to certain rules. Lenders want to know who you are and where to find you. They’ll ask about your finances to decide whether or not you can afford the payments. They’ll also need your Social Security Number to check your credit.

If you can get a loan without qualifying based on your income and credit scores, there’s a good chance you’ll pay too much. Predatory lenders will take just about anybody, but high fees mean it’ll be hard to get out of debt.

 

Go Through Underwriting

After you submit your application, the lender will evaluate you as a potential borrower. This process may be instant, or it may take a few weeks; home loans take longer than credit card offers because there’s more at stake.

They’ll pull your credit (or just use a credit score in some cases) and review your application. Lenders may ask you to clarify or prove something; that’s generally a good sign. It means they take underwriting seriously and are more likely to offer competitive rates.

 

Get an Answer

Eventually, you’ll find out if you qualify for the loan. If you do, the lender will send money to you or whoever you’re buying from, and you’ll start repaying the loan.

If you don’t get the loan, you should get an answer as to why. Ask the lender how to get loans from them if you decide to try again. This information is useful because you can try to fix things. If your credit was not good enough, work on building credit and review your credit reports for errors.

 

How to Get Loans After You're Denied

The most powerful way to get a loan is to show that you have the ability to repay it. Your credit and income are the most convincing factors that lenders consider. However, your power to change those quickly may be limited. Keep chipping away at them, and over time you’ll become a more attractive borrower. In the short term, you can try a few things, such as:

 

How to Repay Loans

As you're figuring out how to get loans, keep repayment in mind.

Some loans are one-time deals; you borrow money to buy something and repay it over several years. A portion of each payment is your interest cost, and the rest is used to reduce your loan balance. This process is called amortization.

Other loans are revolving loans; you can borrow multiple times as long as you make periodic payments. For example, you can use a credit card month after month. You might pay the entire balance every month, but you can continue borrowing until you reach your credit limit.

 

How to Get Loans for Business

Business loans are similar to any other kind of loan. Lenders look for the same basic things. However, new businesses don’t have a long borrowing history (or credit). They also may not own assets that can be pledged as collateral, so new enterprises and service businesses have to figure out how to get loans.

In most cases, and individual - such as the business owner - has to use their personal credit and income to qualify for the loan. They may also have to pledge personal assets as collateral to get loans. This may be the only way to get loans in the early years, but you should try to build business credit so you can eventually borrow without risking personal assets.

By Justin Pritchard / About.com

 

Top 10 Most Beautiful Currencies in the World

Login Form

What happens to my money if my bank closes down? What happens to my money?
What happens to my money if my bank closes down?
How International Banking Works How International Banking Works
What's really so special about these international banking opportunities?
10 Sneaky Banking Fees 10 Sneaky Banking Fees
Even though your bank offers a variety of convenient services, chances are they're not free and...

Bank Wire Transfer

Do I really need a bank account? Do I really need a bank account?
You may wonder whether you need all your money in the bank?
How Fraud Prevention Works? How Fraud Prevention Works?
Ever absentmindedly tossed out a credit card bill or checked your bank balance from a computer at the library?
cash, credit or debit? cash, credit or debit?
Is it best to shop with cash, credit or debit cards?
5 Ways to Spot a Hacked ATM 5 Ways to Spot a Hacked ATM
These days ATM skimming is as easy as it looks in the movies.But armed with some information, you should be able to spot a suspicious ATM when you see one...
We have 47 guests online
Is The Best Bank Always The Biggest?

Certificates of Deposit

How CDs Work? Certificates of Deposit (CD’s) are one of the safest investment vehicles out there. If you want to be at the low end of the risk/reward spectrum, CD’s might be the right choice...Read More

HOT DEAL