Whether you are looking for an auto, home, personal or business loan, there are certain strategies to approaching your bank before the application process. After economic crashes in the past, banks have gotten stricter with reviewing and approving loans. While there are certain areas lenders always look at, there are a few things you can do to approach the loan the best way possible. The CGS Team is sharing 5 ways to pursue a bank loan for the best possible result.
#1 Know What You Need Going In
What type of loan are you applying for? Why do you need it? Are you looking for a home or auto loan? Rates for those types of loans are different than personal loans. Are you looking for a personal loan to cover large purchases? When you know what you need and why, you can start shopping around. You can do your research to find the best rates for the type of loan you need, and have a better understanding of what terms may come with that type of loan.
#2 Get the Loan Requirements Up Front
Once you understand the type of loan you need and the best place to get it, call the bank (or lending company) directly. Ask what the upfront requirements are for loan eligibility. Consider scheduling an appointment with a loan officer to have a better understanding of timeframes, documents and materials needed for a loan approval. Since every lender is different, knowing what you need to have upfront and ahead of time can save you some struggle down the line.
#3 Do a Personal Credit Check
According to Wells Fargo and Bankrate, “Most lenders will look primarily at your credit score, credit history and debt-to-income ratio to determine whether you're qualified for a personal loan, and if so, how much you can borrow and at what rate. The same applies to other types of loan. Your personal credit history plays a big role in your approval. Complete an audit of your current credit situation. Are your current balances less than 30% of your available limit? Are you able to pay more than the minimum payment? If not, you may need to get your current debts under the 30% limit ratio for better odds of being approved for a loan. Read 7 Tips to Help Boost Your Credit Scores for some tips on improving your credit.
#4 Create a Checklist
We love this tip from Forbes: “Based on the information from the bank, it's wise to create a checklist of the appropriate documentation needed for the loan application. It can take some time to secure the documents you need from creditors, your employer, and other financial resources. Incomplete applications can be cause for loan denial.”
#5 If Denied, Understand Why
If for some reason your application for a loan is declined, understand why. Are your current debts and monthly requirements hurting you? Does your business need more assets? Is your income too low? When you understand why you denied a loan, you have a starting point to fix the situation. Your financial moves from this point on should be strategized to help your situation.
Regardless of the outcome of the loan, make sure you can afford it! If you are denied now, that doesn’t mean you can’t get a loan in the near future. Fix the reason you were denied and try again. Do you have experiences with bank loans? What tips can you share for approaching and getting approved for a bank loan? Post a comment below to share!