When making a personal loan application, the lender solely determines what requirements and documentation you need to secure the finances. The conditions may therefore vary according to the lenders. Fortunately, there is standard documentation and information that applies across all lenders.
This article looks at what critical things you will need to apply for a loan. You will need additional information depending on the lender you choose. Check out Låna Pengar to know more.
Here are a few documents you will need to present on the application and during verification.
1. Identity Proof
You need to provide your identity information for the lender to prove that you’re a citizen or permanent resident of the country and above 18 years old. This also prevents common cases of identity theft. You will submit original and duplicate copies of the following documents;
- Birth certificate
- Driver’s license
- Certificate of citizenship
- State-issued ID
2. Loan Application
Every lender has its own unique application form that you get to fill to initiate the lending process. If you’re borrowing online, the application is done on the lender’s website and submitted there within. If it is physically at a credit union or the bank, you can complete the application in person or online if given the option.
You will be asked to give your personal information, loan purpose, and desired amount in the application. That will help the lender to begin processing your request.
3. Income and Employer Verification
Loans vary from personal loans, mortgages, and auto loans. Unsecured personal loans have no collateral, unlike other common loans like mortgages. With this, the lender is at risk of losing their money if you forfeit your payments, and that’s why they may need to verify you have a steady income and can effortlessly pay for the loan.
If you’re employed by any company, you can verify your income using these listed documents;
- Tax returns
- Bank statements
- W-2s and 1099s forms
- Employer’s contacts
- If you’re self-employed, the following documents should help the lender verify your income;
- Income tax returns
- Bank statements
4. Proof of Physical Address
Proving where you live, and the living situation will help your lender gauge your lifestyle and if you can be able to pay back the amount of loan you want to take. Utility bills, lease agreements, and home/vehicle insurance will help the lender determine this.
Common Questions You May be Asked
When making a loan application, the lender will ask you several important questions which you should answer well for your loan to be successful. These questions include:
1. What is the primary purpose of the loan?
Most lenders are not very much concerned about how you will use the money you borrow, but they want to understand what you need the money for. It may help them recommend a suitable loan product that matches your purpose. Different purposes for the loans could also determine the loan amount and their interest rates.
2. How is your credit score?
After you have applied for a loan, the lender will have to pull out your credit score to see if you’re eligible for financial aid. Visit here to see if a hard pull of your credit score will give you an upper hand in getting the loan. It is insightful to know your score beforehand, as it will help the lender inform you right away if you qualify for the loan. A soft pull might just help you get your score without impacting it.
3. How much do you want to borrow, and for how long will you repay it?
While a lender can easily determine how much you can afford to borrow by looking at your financial ability, you should apply for a loan with an idea of what you can comfortably pay. That includes the number of months or years you will need to repay the loan and interest rates. Borrow only what you need even if you can afford more. Remember, the interest applies to every coin you’re given.
Applying for a loan should be very simple with correct documents. Be ready to answer any questions you are asked and bring with you the listed documentation for a smooth process. Keep in mind that you will owe the amount you borrow and interest, which is a percentage of the total amount, so be sure to use the money wisely. You can also shop around for the best interest rates that would favor your intended purpose of taking credit.