How to Apply for a Loan

There are many different ways to apply for a loan. The process will differ depending on two main factors:

  • The purpose of your loan
  • The type of institution you are borrowing from

Typically, people obtain loans from the following institutions:

  • Banks
  • Credit agencies
  • Government

It is wisest to research all types of institutions to find which lending scheme best suits your needs. Also, don’t just apply to the first bank or agency you come across. Do your homework. Read up on interest rates and payment plans for a variety of banks and agencies. Find a loan that is feasible for you.

Also, it doesn’t hurt to apply to multiple places. Remember, just because you apply for a loan does not mean your loan request will get approved. At the same time, though, just because one agency rejects your request does not mean that another agency will not approve it.

Bank Loans

If you are applying for a bank loan, you can apply directly to your bank in one of three ways:

  • In person application
  • Paper application
  • Online application

One option is to set up a meeting with a financial planner at your local bank (or at the bank whose loans seem most desirable) and discuss your situation. This is a good option, as the financial planner will be able to hear out your specific goals, needs and desires, and recommend a course of action for you. He or she will likely know a lot about the bank’s many borrowing options, and will possibly even suggest routes to loans you didn’t even know about. Once you have discussed your options, your bank representative will ask you to fill out paperwork containing requests or information similar to those found in online or paper information.

The major advantage of an in-person meeting is that you can have your questions answered directly, and concepts explained in plain language. You do not have to browse through web pages and pamphlets, trying to decipher cryptic financial terms and scribbling down calculations in the margins of your notepad. You will also access a variety of options in a short amount of time. Also, you may even be able to get a realistic quote as to whether or not your loan will be approved. The disadvantage of meeting with a bank representative is having to take time out of your work day to set up a meeting at both of your conveniences.

Another option is to do the research yourself, then fill out a paper application. These can usually be obtained by visiting a branch of the bank. How to obtain the paper application differs from bank to bank. Some will have them readily available; other banks will require that you speak to a teller or bank representative. Some banks may urge you to speak to a bank representative before filling out the paperwork anyway.

A third and increasingly popular option is to fill out an online bank application. Visit the bank’s website. All bank websites have “loan center” sections. Click on the links that will lead you to this section, and fill out the necessary information. This is a quick, simple way to apply for a loan. You can do it from the comfort of your home or office chair. All you have to do then is wait for the bank to contact you.

The time it takes to process a bank loan application varies from bank to bank. Note that some banks have certain restrictions. For example, state banks often require that you are a resident of that particular state in order to qualify for a loan.

Credit Agencies

Credit agencies have much the same application processes as banks. Typically, you will fill in the paperwork and send it in either by mail or submit it electronically. Once your application has been reviewed and your request has been approved, a credit union representative will call you in to discuss your options.

Government Loans

Federal, provincial or state government loans are usually given for small businesses and for funding education. Federal education loans require an online application. If you are a citizen of the U.S., applications are available in English and Spanish. If you are a citizen of Canada, applications are available in English and French. The application will ask you for your personal contact information, income level, marital status, parents’ income, proposed program of study and more. You will also have to confirm that you are eligible to receive a government loan. Generally, you are eligible if you are a citizen of the country, state or province issuing the loan, or if you are an “eligible” non-citizen. An eligible non-citizen is usually a landed immigrant or refugee. Note that federal government loans are usually not available to students without one of these three designations. However, these students may be eligible for state government loans.

The United States government also gives loans to citizens whose homes or businesses have been involved in a natural disaster. These loans are meant to help disaster victims recover from damage done to their property. The Disaster Area Office has several branches throughout the country; contact one for an application or for further information on loans available to disaster victims.

Information required on Loans Applications

When you apply for a loan, your application will probably ask some combination of the following questions:

  • Name
  • Address
  • Contact Information (phone number, email, etc.)
  • Date of birth
  • Social Security Number
  • Home Ownership Information (if applicable)
  • Mortgage Information (if applicable)
  • Bankruptcy information (if applicable)
  • Employment information (employer, salary, position, years there)
  • Bank account information
  • Assets
  • Other outstanding loans
  • Driver’s License
  • Information for Co-Applicant (if applicable)

The application may also ask some specific questions, depending on the type of loan you are seeking.