Bank Loans: What Is Required?

June 17, 2012 by  Filed under: Loans 

When applying for a bank loan, the better prepared you are for your meeting with the banker, the easier it will be going through the application process. There are some key items which banks will be looking for and you want to avoid mistakes providing them.

It all begins with your credit report. Read through your credit report says and know what the information means to a possible lender. If you have negative marks on your report, be prepared to have reasons which will justify your errors or wait till you have six months clean of any negative remarks on your credit score. The bankers will be using your credit score to evaluate your financial track record. This is key information to getting your loan application approved.

When filling out your loan application, be accurate with your information and make sure you are applying for the correct type of loan. Different types of loans will have different interest rates. You will want to apply for the loan which will make the most sense for your purpose. Loans that are meant to be paid off short-term, but your finances will only support long-term will not get you approve.

Know your finances, what you have coming in and what is demanded out. The banker will be looking at your debt to income ratio (DTI). Your DTI is made up of not only the balances that you owe, but of potential balances as well. You may owe $500 towards a credit card and your balance limit is $1000, a creditor will need to consider your payments towards that creditor will increase. If your budget can only support a small loan because you owe money to multiple lenders already, you will have less chance of being approved. You could walk into the bank with a high credit score, but if your DTI is also high, there is a very good chance your application will be denied.

Have all your paper work in order when you enter your meeting. If it is a business loan, make a plan to show how you will make the revenue to pay it back. If it is a personal loan and your credit will not support your application, you may want to consider a secured loan. A secured loan will give the bank collateral in case you fall through with making payments. Collateral will give the bank security that if the loan is defaulted, they will be able to collect that collateral to sell in order to pay off the loan.

Before you head into your meeting, call the bank or go online to find out more information pertaining to loan requirements. Get all the requirements gathered before you make your appointment. Look at your loan opportunity as a business meeting. It doesn’t matter if your loan is for personal or professional use, you will want to go into the meeting well prepared and dressed for the part. First impression gets you in the door; but your documents, banking history and how you interact with the banker are key components to the loan process. Bank loan applications can be frustrating and sometimes difficult, but you can prepare yourself for success when you provide what the banker is looking for.

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