The loan application process can be intimidating for borrowers. But it doesn’t have to be. The steps to getting a loan are relatively similar whether you’re applying for an operating, business or real estate loan.
Determine Your Needs
Before you apply for a loan, it’s important to determine your needs. This can help you find the right lender and the best interest rate. It’s also important to know how you will use the money. For example, a business owner may seek financing to manage expenses, expand or purchase equipment, build a cash buffer and more. To help you identify your needs, experts recommend using “onion peeling.” This involves separating wants from needs. Needs are those expenditures that directly affect your ability to work and live, such as housing, transportation, insurance (auto, home and medical), food and utilities. Conversely, wants are those expenditures that bring you joy, such as clothing and entertainment.
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Apply for the Loan
Lenders typically consider many financial factors when approving loan applicants, including credit history and scores. Good credit can make it easier to get a loan and typically results in more favorable interest rates.
You can apply online or in person for MaxLend installment loans. Most lenders will generally ask for documents to verify your identity, address and income. You may also need to provide W-2s, bank statements, tax returns and other documentation. Lenders let you know if you prequalify, which can give you an idea of what loan terms you might expect, such as the expected loan amount, APR and monthly payment. Be sure to check for fine print, such as fees and penalties. If needed, consider asking for a cosigner on the loan to help you qualify.
Research lenders to find the right fit for you. Look for lenders with low minimum credit score requirements and various loan programs to choose from. Online tools can help you simultaneously compare rates, terms and fees among lenders. Consider a lender that allows you to pick up loan funds in person if you need them quickly. Check the lender’s website for more information about their lending practices and history and the CFPB‘s searchable database of complaints against financial services companies. It’s a good idea to get preapproved for your loan before starting your home shopping, which allows you to set a price budget you know you can afford and avoid paying high-interest rates on a loan you can’t pay off.
Check Your Credit Score
A lender’s decision to approve a loan or credit card depends on your three-digit credit score, which they determine by reviewing information in your credit report. This number (which typically ranges from 300 to 850) tells lenders your creditworthiness, which influences the amount of credit they offer you and what interest rate you will pay on your loan. Knowing your credit score can give you an idea of how much loan you may qualify for and help you avoid unnecessary costs, such as high-interest rates. It’s also fundamental to check your credit report regularly to ensure it contains accurate information. If you find any errors, such as accounts that don’t belong to you or lines of credit you never opened, report them.
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Finalize the Loan
Once you have a clear idea of what you can afford, you can start looking for homes. During pre-approval, your lender may request additional documentation like bank statements, pay stubs or tax returns. These are called “verifications” and will help them verify the information you provided in your loan application. If approved, your lender will issue a preliminary loan approval and tell you what documents you must complete for final approval. Completing all the verifications will ensure that you can meet the final loan terms and that your home or business will be eligible for a loan like the MaxLend loan you are applying for. This step typically takes 1-2 weeks and happens at the lender’s office, title insurance company or attorney’s office.
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