Today’s loan process has been streamlined to the point that applying can be done quickly. Most applications have been moved online making submitting paperwork not only more efficient but, in many cases, a lot safer for consumers. Even though applying for financing is easier, the application process still requires consumers to prepare.
Regardless of the loan type, consumers are required to submit information that attests to their creditworthiness. Information related to income and outstanding credit accounts tells lenders so much about spending habits, occupation, and total lifestyle. Apply for a Latitude loan now, for example, and expect to submit information related to income, assets, and employment. Latitude is not the only lender that requires additional information either.
Let’s take a closer look at some of the things you should prepare before applying for a loan.
Copies Of Tax Returns
If applying for a personal, home, or business loan, the lender will definitely ask you to submit copies of past tax returns. Few lenders will ask you just to submit the previous year’s tax return, but for larger loans, you might be required to submit at least two years of tax returns. In either case, prospective borrowers would need to provide the lending institution signed copies of their previous years’ tax returns.
The next task prospective borrowers want to do is clean up their credit. The best way to do this is to take advantage of their free yearly credit report that will allow them to see the information provided to the major credit reporting agencies. This report lists all of your open credit accounts, including school loans, revolving accounts (credit cards), car loans, etc.
While most often the reports are very accurate, sometimes the credit file might contain inaccuracies or conflicts. The whole point is to address the errors and inconsistencies by either writing a letter to the credit reporting agency so it can be investigated or paying off the debt to avoid the typical complications that come when submitting an application. If the remarks are derogatory, the lender will require the applicant to submit an explanation.
Put Away A Down Payment
Regardless of the type of loan you apply for, putting away a little before applying can assist you in two ways. The first way savings helps is in terms of providing a sizable down payment on the loan, which can help in lowering your interest rate. Then, the savings can also serve as an asset, which is typically a question asked on most applications.
Proof Of Assets
Finally, gather all of your information related to all of the assets you have. This should include any savings accounts, retirement accounts, second homes, cars and other vehicles, etc. The lender uses this information to determine the amount of risk, so the closer you get to applying, creating a folder with all of this information can make the loan process run smoothly.
Finally, the lender wants to know how you are going to pay off the loan, and so many applications will include a section that asks you list present and previous employers. This is very important because, in many cases, they want names, addresses, and phone numbers of both previous and present employers. Before applying, consumers should prepare by creating a folder containing this information.
Preparing Before Applying
The loan process can be so much simpler when all of the information is ready and available. Having the information readily available is especially important when applying online because applications are often held up when blanks are left empty or information is not accurate. To avoid these types of errors, prospective borrowers can create a folder with all of this information to make the application process run smoothly.
*This article was contributed.