Before you start to apply for a bank loan, you will need to plan carefully. This becomes all the more important if there is a family behind you as you would need to consult them as much as possible. This is because you will need the help and guidance of your family when it comes to executing your plans.
After planning, the next course of action would be to establish the type of loan that is most ideal for your specific situation. Say you are looking to get a business loan; you need to determine the exact type of business that you want to do and the likely advantages and disadvantages so you can have some rough idea on how to go about applying for the loan, and the estimate figure to apply for.
It becomes very tricky when you have to borrow money to start a business. This is because not only will you have to take care of the loan repayments, at the same time you will expect your business to make some profit so as to take care of the interest, which can be very tricky especially within the first few months of starting up.
Important questions to ask yourself include:
1 What type of loan are you comfortable with?
2 What do you plan to do with the money after you borrow?
3 What is the loan’s interest rate?
4 How much do you want from the bank?
5 What are the terms and conditions of the loan and how long is the loan repayment period?
You are faced with two choices when it comes to loans – secured and unsecured business/ personal loans. As the name would suggest, a secured loan is one that is backed up with some form of collateral such as property, automobile or any other valuable item. An unsecured loan on the other hand is the exact opposite of a secured loan; there is no collateral needed.
There is always a catch though, because the loan is unsecured, it will attract a very high interest rate and most of the time very strict terms and conditions because of the high risk that the lender takes. It is also to be mentioned that the amount of an unsecured loans is always lesser than that of a secured loan.
Once you establish the type of loan that you want, it is time to apply for the loan. You will need a loan application form which you must fill in personal information including your official names, your physical address, your age, sex, marital status, your financial status, name of your employer etc.
The loan application form ought to be accompanied by an up-to-date credit report (which the lender obtains on your behalf from any of the three leading credit bureaus at your expense), supporting documents to proof your income, and documents for the collateral i.e. Title deed, log book etc.
It is to be mentioned that there are very many lenders out there; hence you will need to shop around in search of the lowest rate of interest and best terms and conditions that you can get.