Getting a Loan

Did you know that obtaining a ‘personal loan’ from a lending institution is not the same as applying for a ‘home equity loan’ or ‘automobile loan’?

Lending institutions want to know why you want the money. Often times they are happy to lend you money if they have collateral to back up the loan, such as a home, automobile, or a co-signer.

Remember, a bank or credit union wants you to be a long term customer of theirs. That is their goal. So if they can help you get a loan for your needs, they hope that you will be a customer of theirs for years to come.

The Loan Process
The loan process is always subject to the underwriting process. Yes there are black and white questions and answers on a loan application, but there is still the human element of underwriting.

When you submit a loan application, a lending institution’s underwriting department looks at the application to determine if you are a good ‘risk’ for them. You may think that you are not a good ‘risk’ due to credit problems in the past, or a poor FICO score from your credit report.

Let the professionals evaluate your ‘risk’. Apply for the loan. The worst they can tell you is no. If the answer is no, ask them to direct you, ‘Where would my financial situation have to be to get approved for this loan’? A lending institution will give you professional advice. Remember, they want to give you the loan. You just have to pass their ‘risk assessment’.

If you get turned down by one lending institution when you try for a loan, you can try somewhere else. Remember the ‘risk assessment’ and the underwriting departments mentioned in the previous paragraphs?

A lending institution’s ‘risk assessment’ is different than every other lending institution’s. Banks are different than credit unions. Sometimes, depending on the economy, it is easier to get a loan than other times.

Don’t be afraid to shop around a bit. A good consumer will check out 2-3 different loan programs to get a good interest rate anyway.