If you need to borrow money from a bank, just know you are not alone. There are so many reasons why anyone would choose to take a loan from a bank, and with the many packages available, there is sure to be something for everyone. Before you decide to get a loan from a bank, however, there are certain points you need to take into consideration. These would give you a higher chance of getting your loan request approved.
Find out if your bank is giving the type of loan you need
Not all banks offer personal loans, and some will not offer a mortgage loan. Find out from your bank first if they offer the kind of loan you are looking for, or if you would need to look for another lending house, like a credit union.
Check your credit score
Your credit score is basically your creditworthiness. It is based on your credit history, the number of open accounts, levels of debt, repayment history, and other factors. The higher your credit score, the better your chances of getting the amount you want to borrow approved.
If you have never taken a loan from the bank, don’t worry. This will not stop them from approving your request if you meet the basic requirements. It may only mean that you will not get as much as you asked for.
Understand the loan you are looking to get
If you need to borrow money from the bank, then you must understand the type of loan you would most likely get. Loans can be unsecured and secured. An unsecured loan is not backed by any collateral, while a secured loan is the opposite.
Every loan will also be paid back with interest. You have to know how much interest your expected loan will attract, and whether you can afford it. Remember that the duration of the loan repayment will also affect how much you end up paying, so understanding the facility in its entirety is just as important as applying for and getting it.
Make sure your paper work is complete
Getting a loan from a bank will require quite a lot of documentation, and to ensure your request is approved faster, you have to start putting together the necessary paperwork as soon as you can.
- Proof of income or a letter of approval from your employer (this last requirement may also depend on the bank);
- Proof of tax payment;
- Proof of collateral;
- Loan history (if you are not a first-time borrower);
- Personal identification.
The type of paperwork you’ll need to submit will depend on the kind of loan you are applying for, but generally, you should be expecting to tender the aforementioned.
Bonus tip: Make a plan to pay back
This is perhaps the first thing you should think of before you decide to borrow money from a bank. Remember that your repayment history makes up part of your credit score. If you keep defaulting on your loan repayment, you will ruin your credit score, even if it may be temporary.
Getting a loan from the bank is not an indictment of your finances. However, before you take out a loan, you would need to know and understand certain factors. Your credit score, the type of loan you need, your bank and the requisite paperwork are among these necessary factors.