Loans

Loans are borrowed money to be paid back with interest. They can be personal loans for any reason, mortgages for a home or other property, or auto loans for vehicles. Credit cards are even considered a type of loan because you are borrowing money. 

How to Apply for a Loan:

Required Documents: 

• Proof of identity
• Proof of income
• Proof of address

Decide How Much to Borrow: You not only need to pay back the loan amount, but also interest. Only borrow what you need so you're not paying interest on money you don't need. 

Check Your Credit: Loans rely heavily on your credit score, so knowing your credit score will help you to know how likely you are to be approved and how good or bad your rates are likely to be. 

Where to Apply for a Loan: 

• Banks and Credit Unions
• Non-Banking Financial Institutions (NBFIs) such as finance companies, insurance companies, payday lenders, etc. 

Check Your Eligibility: Check with lenders to verify eligibility. Check to see if there are minimum credit requirements, income threshold, and minimum credit history. 

Get Pre-Qualified: Get pre-qualified for the lenders that you are eligible for. This means filling out a short form and the lender will pre-qualify you for a loan amount and rate. This prequalification is not a guarantee that you will get the loan at that amount and at that rate. 

Check Out the Details: 

• Expected loan amount
• APR
• Monthly payment
• Loan term (length)
• Fees and penalties
• Type of interest (Fixed/variable, simple/compound)
• Unsecured or secured
• Automatic withdrawal (Are automatic withdrawals of monthly payments mandatory or optional? If optional, is there a lower interest rate?)
• Arbitration ( In the event of a conflict, is arbitration mandatory, or can I take the lender to court?)
• Prepayment penalty (If I pay my loan off early, will I pay a penalty?)
• Fine print

Apply for the Loan: Once you've narrowed down the loans that you're considering, it's time to apply. If you apply to more than one lender, group your applications together in a span of 14-30 days to minimize the impact on your credit score. 

Close the Loan: Once you're approved for one or more loans, pick the one you would like, sign the papers, and obtain the funding.