Applying for a Loan: Friend or Foe?

loan

Looking to finance your business and get a jump start on any debt that you currently owe? A loan is definitely an option you want to explore when these situations arise. Most lenders are very willing to assist with personal loans, small business loans and also consolidation loans when you have several small installment loans and want one lump sum payment. There are several things to consider when you are thinking of getting a loan or want to improve your economic development. Receiving a loan or financing can be a very complex or easy process depending on your financial situation.

Upon speaking to a lender about receiving your personal or small business loan, you will need to bring several things with you before speaking with someone.

Typically, most lenders do require that you have six months to a year of solid employment at the same employer. Some of these may require you to have worked somewhere longer, every lender is different.

You will also need to bring records and registration of items that you own and currently pay for such as mortgages, automobiles, etc.

If you have had a loan previously or have a current open loan, you will also need to provide documentation of those as well as payment history.

When these factors are considered, you will also undergo a credit check to clarify some of the information you have already provided as well as get a credit score. A lot of lenders will not proceed with a loan application if a credit score is below 600. If you know that your credit is bad, you do not need or want to apply for a loan. Most lenders approve applications when it is likely that the client will pay the funds back in full and promptly. They also looks for clients who are likely to pay off their loan very quickly by paying ahead. If you have less than ideal credit, there are finance companies and economic development systems that offer starter loans of small amounts to help improve credit scores.

If you are approved for a loan, the lender will discuss with you the amount of payments you will be making per calendar year as well as the amount. Most financial institutions do propose that you offer an automobile or something valuable as collateral in the event that you do not pay back the loan. When this happens, you face the penalty of having said collateral repossessed entirely for the amount that you owe or held by the finance company until the money is paid.