is a crucial beginning of a loan. After you come to a conclusion
that you are in need of finance from a genuine financer, then
you should start applying for a loan. The most important are
to know the financers whereabouts, rate of interest, payment
system, repayment mode, terms and conditions.
to provide for Loan application:
A banker must need the
information about provide credit, income, asset, and liability
information, including your income, residence, and personal
identification. You can save time and expedite your application
by collecting all before you begin the process.
You have to provide the
Employment and salary history for the past two/three years.
The addresses of your residences for the past two years along
with evidences are very much importance for your Loan
application. You and associated members• social security
number are necessary as a proof of residence and citizen of
You have to provide your
current source of income - this includes your base salary, any
commissions or bonuses, dividends, etc. You should prepare a
balance sheet for your income and expenditures in fiscal year.
The detail of your current or saving account numbers and locations
of your bank accounts should be provided correctly for bankers•
enquiry. Besides Bank, you have to give the detail of your investment:
account numbers, balances, and names of the institutions holding
If you are a self-employed
or compensated by commissions, in this case, you need to supply
your federal tax returns for the most recent year you filed
and the year preceding that one or two years.
There are a few
questionnaires make you easy to analysis of loan regarding:
1. How much are you supposed
to pay upfront
In some cases you will not be paid the entire amount what you
applied for. It may be around
80% to 90% of the cost of the home or vehicle you are going
to buy. This is applicable even for education loan. The margin
amount/ fund you have to contribute around 10% to 20 %.
2. How much EMI and when
is your pay-day
According to your payment
capacity in a regular basis, the Equated Monthly Installment
(EMI) is the amount of money is fixed. You have to see whether
you are able to regularize or not towards repaying your loan.
The EMI is a combination of interest rate payment and principal
Once your EMI date is
fixed, that will be mandatory date for you for repayment. It
may be as your post dated cheques, Electronics transfer from
your account, but the date cannot be missed by you. Else they
will charge a penalty against default. So this is a matter of
3. Does it benefit tax
Only the home loan and
education loan etc come in this scheme. The best tax benefit
loan is home loan. If you are in need of a house and your tax
deduction is high you have the best option to go for a home
loan. The amount you pay as EMI will be calculated your tax
calculation and it will balance your fiscal income balance sheet.
4. Do you have to pay
You should check out
whether any hidden charges for late payment, processing, annual
fees, member fees etc. Sometimes, you are charged if you repay
the entire balance principal before the tenure ends. This time
you have to check the benefits for your as rate of interest
and the amount already paid as loan repayment.
5. How much the rate
of interest is applied for your•
This is a comparative
study before you apply for a loan. Check about the compound
interest or flat rate of interest supposed to be applied for
your loan. Check the same condition in other banks and be confirmed
the cause of the way it is computed.
There are few documents
are mandatory for the loan processing. You have to use an attorney,
escrow company, or title insurance company.
Loan Application / document
The check list
of documents includes:
1. Verification of income
• Earnings statements
that are recent pay stubs and tax returns for the past two years.
• For self-employed:
profit and loss statements and tax returns for current year
and previous two years;
• Extra income:
social security, overtime bonus, commission, interest income,
veteran's benefits and so on.
2. Verification of your
• Bank account
• Address of your
• Checking and
savings account statements for the previous 2-3 months
• Savings bonds,
stocks or investments and their approximate market values;
• Copies of titles
to any motor vehicles that are paid in full.
3. Information about
• Copy of the purchase
contract from the vender / dealer / house builder
• Show the deposited
receipt that you have decided for buying the house
4. Your debts
• Show Credit card
bills for the past few billing periods
• Other debt such
as car loans, student loans, furniture loans and other personal
and cosigned installment loans
• Evidence documents
of mortgage and/or rental payments
• Copies of child
By any chance if you
dont have any established credit history and have any canceled
checks or obligations, show as payment history and amount of
revolving debt. Better if you can show the resource of your
down payment for the loan. If you have gifted money to any relative
then bring the copy of gift letter and copy of gift check to
show your expenditure. The gift letter should state that the
money will not have to be repaid from the relative. Different
lenders may have slightly different information requirements,
so better you ask your lender what to submit along with Loan
The application formats are slightly different for different
purpose of loan also. There are different items and parameter
for personal loan, Car loan, home loan, student loan etc. The
basic information to be written is same such as identification,
finance history, liabilities, amount, evidences etc.
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