Mistakes to Avoid When Applying for a Loan

Whether it's a business loan or a personal loan, there are several common loan application mistakes that many businesses and individuals often make when applying for a loan. Avoiding loan application mistakes is your most valuable tool in being approved on a loan. The following common loan application mistakes can interfere with loan approval.

1. Being unaware of your credit rating.

Before even attempting to get a loan, know where you stand. Request copies of your credit reports from Experian, Equifax, and Transunion, which are the three major credit reporting agencies. Your reports will show whether or not you've made your payments on time, or if you've defaulted on a loan, declared bankruptcy, or had any other financial problems. Additionally, it will show positive items, such as when you've paid your bills one time, or when you've paid a loan in full. Consistently paying your bills as scheduled shows that you're worthy of a loan, and is very attractive to a lender. If your credit has undesirable listings, be aware of them, and be prepared to explain them to the lender.

2. Not understanding the loan terms before signing.

Avoid the most common loan application mistake, and make sure that you read and fully understand everything involved with the loan before signing. Not only should you take the time to read the fine print in its entirety, but you should also ask questions about anything and everything that you don't fully understand. This is a common loan mistake because individuals are often so anxious to get the loan that they fail to pay attention to the details. Don't assume that the terms on this loan are the same as for "any other loan." Know what you are signing before you sign.

3. Continuously searching for a lower interest rate.

Interest rates change often. If you feel you've found a great rate, lock in before the rate increases to avoid this loan application mistake. People quite often make the loan application mistake of getting greedy, opting to see if rates will drop even farther before locking in on that rate. This loan application mistake of continuing to search for an even lower rate often works against you, rather than in your favor, especially if you have to wait longer to obtain the loan that you perhaps need immediately, or worse, if the interest rates actually increase rather than drop.

4. Not explaining the details for needing the loan.

Yet another common loan application mistake of not fully explaining how the loan will be used. For example, if the loan is to be used for business purposes, explain the details of how you will use the money. Lenders want to see that you know exactly how you will use the money, and how this loan will meet your needs.

5. Make major loan application changes.

Show the potential lender that you are stable and can make solid decisions. Don't apply for a business loan, for instance, and submit a loan proposal, only to call the lender a while later and tell them that you've reconsidered and plan on using the money differently than stated in your paperwork. Make your decisions prior to this, and don't make this loan application mistake of being unsure when you apply. Submit your proposal only in the event that you are 100 percent sure of your actions and will not change your mind.

6. Apply only to the most convenient lender.

While heading to the bank in which you do business with is an obvious reaction, avoid the loan application mistake of not shopping around with other lenders. Check into obtaining a loan with a credit union, and if you're searching for a small business loan, consider investigating programs offered through the Small Business Administration. This loan application mistake is also easily corrected by making just a few phone calls to lenders' check rates and offers.

7. Not having current finances in order.

Whether you're in need of a personal loan or a business loan, don't apply for a loan without proper financial documentation for the lender. This loan application mistake can either delay the loan process, or cause the lender to immediately turn you away.

8. Failing to have equity.

Especially for a business loan or a home loan, having some equity, such as a down payment, can significantly increase your changes of securing a loan. While this loan application mistake is sometimes unavoidable, be aware that lenders are not as enthusiastic to offer loans to those without equity, especially loans for large amounts or for individuals with less than desirable credit scores.

9. Having no collateral.

As with equity, no collateral gives no assurance to the lender that the loan will be repaid. Having collateral increase your chances of having the loan approved. Collateral can come in many forms such as automobiles, savings accounts, home equity, certificates of deposit, (CDs) and anything else that the lender considers to have value.

10. Not having a business plan if the loan is for business.

Not having a business plan in place, or employing a poor business plan, is an inexcusable loan application mistake, yet can be easily corrected. If you're starting a business, or wish to obtain funding to expand on an existing business, you need to demonstrate to the lender how the business will operate and make money. A business plan is essential for a lender to see your goals and see how you plan to reach those goals.

11. Not avoiding hidden loan costs.

Avoid signing a loan that requires hidden costs. This loan application mistake might include fine print stating that annual fees, bank charges, closing costs, commissions, and balloon payments are required. Be informed, and don't sign anything without being completely sure what it means.



Rebecca Game is the founder of Digital Women ®, an online community for women in business. A 30 year entrepreneur and dedicated to helping other women find small business loans. Visit her site: Loans for Women http://www.digital-women.com



By: Rebecca Hubbard Game

The Different Types of Loans

Today, loan has become the part of the normal living. In the present circumstances, it is difficult to identify a person without even taken a singe loan. Loans are the money provided for temporary purposes, which has to be repaid in the particular repayment track. Now, most of the people have multiple loans since the economic conditions are becoming stringent. The widespread utility of the loans have motivated to introduce many different types of loan. The different types of loan have its own characteristics and attributes, which makes it different from others. The economic regulations prevailing in the country is the deciding factor behind the different types of loan.

The different types of loan are available mainly in the focus of the purpose of the loan. The most popular types of loan include home loan, personal loan, car loan, student loan, payday loan, debt consolidation loan and so on. The lenders have also introduced many subtypes of these loans, to meet the necessity of the specific group of people. The point essentially has to be noted is that these loans have different rates and repayment track. Each type of loan will be structured according to the needs of the particular loan. In case of a particular loan type such as home loan, the repayment track will be longer and the interest rates will be comparatively cheaper.

The different types of loan can be primarily categorized into two major classes, secured and unsecured. The secured loans are the particular group of loans, which is raised from the lenders by providing a collateral security of any of your valuable assets. Secured loans seem to be the most flexible loans as they are offered in lower interest rates and longer repayment tracks. The secured loans are provided in lenient terms as the lender does not have any risk in the loan amount as they can go for the foreclosure of the asset, if the borrower makes any lapse in the loan repayment. The home mortgage, equity loan, and car loan are some other types of secured loans.

Unsecured loans, on the other hand, are provided without any collateral security. The lenders have the risk of their money and most often the rates and other attributes of loan are very narrow. The borrowers cannot enjoy many privileges in the unsecured loans, but it does not relieve you from the risk of losing any of your valuable assets, if you make any defaults. The loan refinancing is a unique loan type, in which a particular collateral property is used for a second loan in an increase loan amount or better conditions and rates. The loan refinancing is opted as a beneficial plan in many options as the collateral gains more appraisal value.

Even though the requirements for each loan will be different, some conditions can be generalized as a common requirement for any type of loan. Good credit score is the basic requirement for any loan. However, now many specialized lenders are present in the market that can provide loan to bad credit people. Due to the competition in the market, most of the lenders are ready to provide many adjustments in the loan rates. Online loan lenders have made the loan processing easy. The intensive market search will help you to obtain an appropriate and affordable loan.



Andyem's website contains expert articles written about Payday Loans, Home Equity Loans, Car Loans, Personal Loans, Student Loans. This blog is updated every hour and we also recommend which loan companies to get your payday, home equity, student, car and/or personal loans from. Please visit Payday Loan Blog [http://paydayloanblog.net] for more information.



By: Andy M