- Business and Employment
How to Get a Loan from Bank
If you've never applied for a loan before it can be a daunting task. Loans are tight these days after the Financial Meltdown of 2008 and even after the famous 800 billion-bailout plan, controls on loans are still pretty stringent
However, with the help of this article, you'll find it isn't so intimidating after all.
Today you'll learn secrets of how to obtain some of the most common types of bank loans, things your bank or Loan Officer might not tell you.
When you are finished, you will have learned some valuable secrets that will make getting that loan simpler and easier to do.
Most people's first choice in getting is to get a loan from a bank. This means you're going to need to get your ducks in a row before you step into the bank's lobby.
You'll need at a minimum the following:
- A salary certificate - This could be a letter from your employer attesting to your current employment and salary. It might also entail a letter or form sent directly to the bank from your HR department on your company’s letterhead.
- A detailed listing of all your income and expenses:
- Food costs
- Rent/Mortgage payment
- Car payment
- Outstanding Student Loan(s)
- Other loans
- Other sources of Income
- A credit check listing your loan and credit history.
- A detailed inventory of your valuables and possessions you own.
- The more organized you are the better your chances of securing the lend you desire.
- Loan officers today watch even body language today to see if there is any inconsistencies in you or your application.
- You need to be sure your paperwork is in order and clean and neatly done.
- The more professional it appears the more likely you will receive approval.
- If your credit history is spotty, you make have to build it up by taking out a home equity loan or a small personal loan to raise your credit score.
Get a Credit Union loan in order to get a bank loan
In many instances, a Credit Union has less strict lending criteria. However, is always to go into and lending institution looking your best.
So, the same recommendations that you would use for a bank apply to Credit Unions as well.
The 3 things in addition you need to do to apply to a Credit Union for a loan are:
- Find a Credit Union
- Become a member
- Apply for the loan
Sounds a bit simplistic, But Credit Unions vet many of their prospective members before allowing them join.
- The tradeoff is that their loans rates often better than those offered by regular banks and savings and loan firms.
- One of things you need to be aware of about Credit Unions is that they are not FDIC insured.
- They are insured by the Nation Credit Union Share Insurance Fund (NCUSIF), which has different guidelines you may wish to become familiar with.
- Having said that, Credit Unions offer similar services to that of a bank and getting a Personal Signature Loan is often much easier than from a bank.
- They also provide:
- Student Loans
- Auto Loans
- Business Loans
- Home Equity Loans
This may be a good route to follow if you need to build up your credit first before applying for a home or other type of loan at a bank.
Get an Equity Loan 1st and build up you credit score to be approved for a regular bank loan
Most people get a home equity loan for one of following reasons.
- They have suffered a setback in their credit and need to rebuild their credit history to be approved for a normal bank loan..
- They need money to pay off high interest credit cards.
- They want to purchase a High Ticket item, which a bank may be reluctant to finance.
- They want to take a trip or a vacation.
- Build an addition on an existing house.
- Student Loan
These types of loans are easier to get and they can help build up you credit score, which later allows you to negotiate for bank loan for personal, business, or refinancing of your existing mortgage.
The certificate of salary is often key to securing these types of loans. With today's high turnover rate in the job market, Loan Officers want assurances that you have a job that will allow you to payback their money they loan you.
Things to know about getting Student Loan from a bank
A Student Loan is one of the easiest loans to get nowadays. The federal government has just changed the rules on the paying back of student loans, which changes the interest rates, which makes them more attractive and easier to pay off.
With over 60 billion a year, to loan out for students the Fed is trying to make education affordable to everyone who wants or needs it.
However, there are some things you need to be aware of.
Student loan repayment is not like that for a regular loan.
- They take precedence over everything.
- Bankruptcy may not protect you from having to payback your student loan.
- The Government can seize assets and garnish your paycheck to pay off your student loan.
Auto loans from a bank
The Auto loan is usually after the student loan is the easiest to get. However, it never hurts having your ducks in a row.
Have your paperwork in order along with a salary certificate as mentioned previously.
You should be aware of the following however:
- Loans on new cars are much easier to get then older makes and models cars.
- Insurance rates are better.
- New cars meet current Federal guidelines for air quality and other EPA mandates.
- Their resale value is higher in case of default.
- Certain cars are more likely to be approved, such as:
- Gas efficient SUVs
(Check with the Bank or Credit Union for a list of vehicles)
- A good driving record is a good thing to keep and maintain as it is now being used by some Loan Officers as criteria for loan approval.
- Proof and a history of being insured, as this latter part is to verify you will keep the vehicle insurance. Some of those applying for auto loans in the past only got insurance and kept it long enough to obtain an auto loan and then let the policy lapse.
So have your paperwork ready, keep your driving record clean, and prove you'll keep the car insured and getting that new car should be a simple task.
A Home loan from a bank
Finally, we tackle the hardest loan of all to get nowadays after 2008.
- Your paperwork should be spotless, net, and correct. Follow what has been outline before in this article and verify if there is additional paperwork required by you financial institution.
- Housing loans are now scrutinized much more tightly after 2008 and the subprime loan debacle with the “Credit Default Swap Scandal” that almost gutted
AIG, which insured most Home loans at the time.
- You may want to save cash, as well by saving more cash to put down on the house. 20% or better paid up front makes the loan officer smile and you save on the cost of PMI insurance.
- PMI does not go to the principle of your loan and is an addition expense, as most lending institution require you have to have homeowners insurance before they will approve your loan.
- It is also a good idea to hire a Real Estate Attorney to not only look over your Loan paperwork, but have him at the final closing as well.
This can save you thousands on hidden fees and percentage points paid to your lender.
Today even is this tight market post 2008, it is possible to get a good loan for whatever reason, if you follow the suggestions in this article.
Having a salary certificate is probably one of the most important things you need now to insure your loan is approved.
Loan Officers key off this and use it to make sure they don't issue a loan that may default 5 or 10 years down the road.
Perfect paperwork is also used as a sign that you are organized and able to manage your affairs properly.
Lending institutions are in business to make money and the more that you can show you are a good risk the better your chances of getting your loan approved.