We all know that it takes money to grow money, whether you’re just starting your business or you’re expanding it, it takes a whole lot of money to accomplish it. Home improvements, medical bills, and even travel sometimes costs more than what you’re earning, so financial support is a necessity at some point in life.
While it can be a bit tedious and cumbersome, but knowing the procedures when applying for a loan is important, and can help take out any further hassles in the future. Plus, you’d get a great idea as to why standard procedures are necessary and being followed before getting approved. Here’s a step-by-step outline of the loan processing:
Loan documents
At the start of the application, a loan administrator will work with you directly to collect all the information required to prequalify your loan request. One of the first things to be discussed is your plan for the loan proceeds – home improvement, business, and such. If you have an existing business, the lender will need to understand what services or products you offer, as well as your plans for the future, if any. Once the loan processor gets an idea of what you do, and have all the information needed, as well as have a clearer picture as to why you are requesting a loan, they will then proceed to input all your details to the system. Once that is set, you’ll then proceed to the next step of the application process.
Credit report
When applying for a loan, it is necessary to have clean and accurate credit reports. That way, the loan officer will have an easier time trusting you and your purpose for getting a loan. Having a spotless credit report can ultimately speed up the application process as this is a great way to evaluate their loan worthiness, as well as their capacity to pay for it.
Income sources
This probably will be the most important step in the process, as it shows the loan officer your capability to pay for a loan if ever you get approved. You’ll have to provide all the necessary documents and information for the loan processors to verify your capacity to pay for the requested loan. These include proof of income, certificate of employment if any, as well as evidence of assets such as a land, a house or a car.
Appraisals and Inspections
Once your income has been verified, the loan officer will then proceed with any necessary appraisals, proof of insurance, or inspections. Appraisals will entirely depend on the type of loan. For example, if you’re applying for a mortgage loan, then your house and land would need to be appraised accordingly.
Document Reviews
The next step would be to wait, as loan officers will be taking a few days to verify, check, and re-check all the documents and information submitted to make sure that there are no mistakes and oversights. If the loan officer spots any vague information, or if there is a need for more supporting documents, he/she will contact you and verify things before proceeding with anything else.
Submission of files
Once everything is in place and ready, the loan officer will then go ahead and submit your application. Next thing to do is to wait another few business days for the application to be approved.
Approval
Given that everything went well, and the documents provided to check out, the approval will follow. Once a loan is approved, the loan officer will contact you to sign some necessary contracts and documents. Once that’s done, your loan will be released.
A recap:
- To apply for a loan, it is highly advised to have all the necessary documents ready.
- It is important to provide any kind of information to help you get approved for a loan.
- It is essential to have all the necessary proofs of income for easy verification procedures.
- It is vital to have a spotless credit card report to have more chances of approval.
- It is recommended to provide supporting documents to prove that you have assets such as properties.
- It is always best to follow all necessary legal procedures to make sure that your loan application goes smoothly.
Again, loan applications can be a bit wearisome at times, but following necessary procedures is needed to make sure everyone safely gets the loan they requested. This will also be great for the lender, as it gives them peace of mind knowing that they lent money to people who are trustworthy, reliable and lives by the law.
