The last thing you should learn about before applying for a loan is the loan application. It is always helpful to understand the basics of a loan application. You will be able to ensure that you fill it out correctly and that you have all the necessary information when you know what is in the application.
Not every loan application is going to be the same, but there are some general things about loan applications that can be found in almost every type of loan application. Here are some things you will find in the typical loan application:
- Bank information
- Applicant information
- Loan request
- Purposed terms
- Work history
- Financial information
- Signature page
The first section of the application usually contains the bank’s name, address and the name of the loan officer handling the application. This is for identification purposes. You know by looking at this section what lender you are dealing with and who to contact should you have any questions.
This section is where you put all your personal information, like your name, address and phone number. You will also need your social security number. If you have a co-signer or a co-applicant then you will need their information, too.
In this section you will put in the request for the loan you want. You will specify the amount of the loan and in some cases you can even request certain terms of the loan.
Sometimes the lender will include some basic terms and conditions of loans in the application. These are usually not specific, but they are worth taking the time to read through them. This section may not be included at all. For some loans you may even be able to put in terms you would like for your loan.
Here you will list the collateral, if any, that you are putting up. You will need detailed information. For example, if the collateral is a vehicle then you will need the year, make, model, number of miles and appraisal value. You may also need information such as the appraiser’s contact information and a photo of the collateral item.
You will need to fill out employment history for at least the past two years or past two employers. You will need the employer’s name, address, hire date, amount of pay and pay schedule. You will likely also have to provide proof of income to supplement this section.
Here is where you where you will include your monthly budget and other financial information. You will need to be well prepared for this section as it is quite involved. You will need to be able to list all of your expenses and debts. You will need the names of the companies to which you owe money or make payments, as well as their addresses and phone numbers. You may also be asked to provide documentation such as cancelled checks or bills for each company listed. Under this section you may also find an area to list your assets, such as a home, vehicle or any investment accounts. You will also need to list all open bank accounts, including lender information on each account.
The signature page is simply where you and the loan offer sign. Your signature is proof that you agree that everything within the application is true to your knowledge. The loan officer will sign to witness your signature as valid. If you have a co-signer or co-applicant then they will also need to be present to sign as well.
Generally when you fill out a loan application at the financial institution someone will assist you with the process. They will usually fill in the information based upon questions they ask you. However, understanding these sections of a typical loan will help you to ensure that you have all the information you need to complete the application during your visit. If you need to fill out the application on your own then you will greatly benefit form knowing more about the sections of a loan application.
Loan Documents You May Need
As you can see by looking at the different sections of the loan application you will need quite a bit of documentation. As with the loan application, the documents you need may vary from loan to loan and lender to lender, but here is a list of the most common documents you will need when applying for a loan:
- Driver’s license
- Social security card
- Pay stubs for two months
- Copies of bank account statements
- Title to vehicles
- Deed or mortgage for home
- Bills or cancelled checks
It is always best to have too much information rather than not enough. You can always call your lender beforehand to see what documents you need, but in general you will need documents that will show proof of identity, financial statements, proof of income and proof of assets. The lender wants to be able to see that everything you are stating in your application is true.
Making false statements on a loan application is serious and will get you disqualified for the loan and perhaps result in serious legal issues as well.
Applying For A Loan
Applying for a loan can be done in a few different ways. You can apply for a loan:
- In person
- On the telephone
All three options can be a great way to apply for a loan. However, you may find that one option is better for you than the others. Take a look at the advantages and disadvantages of each application method.
In person you will have the advantage of having a loan officer right there to assist you. The loan officer will likely walk you through the process. This is good if you are really unsure about filling out the application.
You can also usually get a lot of answers to questions you may have and learn about the different loan options when you fill out the application in person. The only down side of this method is that you will have to travel to each lender to fill out the applications.
ON THE TELEPHONE
The telephone is a convenient way to apply for a loan. You simply call into the lender or they can you and you fill out the loan application over the phone buy answering the loan questions.
This can be a great method when you are unsure of exactly what paperwork or information you may need. Since you can call from home you will be able to run and get information you need if it is not right in front of you.
You also do not have to visit the lender until it is time to sign the loan. The major downside is that you have to make sure you are talking to a legitimate lender since there are many telephone loan scams.
Online loan shopping is one of the newest ways to apply for a loan. You can often apply for multiple loans at one time. The biggest disadvantage with online loan application is the security factor.
Security is not always guaranteed. You have to be very careful when choosing an online lender, but it can be a very quick and easy way to apply for loans. You do not have to go to the lender to apply and many times you can even finalize the loan via a digital signature without ever having to visit the lender in person.
You should choose the loan application method that works best for you. You will want to make sure that you feel comfortable with the application method. You may not always get to choose the method, though. If you want to go with a certain lender then you have to use the application method that they offer. However, knowing the different methods never hurts because you will still want to shop around for your loan and not just jump right in with a lender.
Understanding a loan application can really help to take the fear out of applying for a loan. You have learned all about the types of loans, qualification factors and every other detail, so now you know about the actual loan application. You are all set to get out there start applying for loans.
It’s also important to note that applying for many loans can impact your credit score so choose wisely.