Planning to Apply for A Business Loan? Your Go-To Checklist

Applying for a loan isn’t an easy job because many applications might turn hectic, and sometimes you might think that it’s better not to borrow loans. But if you look at it closely, the process isn’t hectic at all. It’s as easy as you want.

You have to remember a few points before applying for a loan because, as we all know, precaution is better than cure. So, taking some precautions and making a checklist of steps to remember before applying for a loan will help you in the hassle-free loan borrowing process. Below is a checklist that might help you before you apply for a loan:

1) Know Your Lender


The loan is something that you can’t just think about and take right away. When you plan on applying for a loan, you need to think about who the lender is and what the lender’s terms and conditions are. Choosing a right lender is very important. Choose some credible lenders like who can serve you best.

Best approach is to shortlist four-five banks/loan lenders, go to all of them and compare their terms and conditions with others. If you think the right one is the one whose rate of interest and terms and conditions are easy to handle, you can finalize your lender.

2) Keep Documents With You

There are a series of documents you need before applying for any loan. Your bank statements, address proof, Id card, PAN card, passport size photo, etc. So before going to a bank or loan, lenders check out on their website or ask them for documents required for loan borrowing.

Keep your documents handy so that whenever someone asks you to give them documents for the loan, you can give them instantly. Moreover, your documents should be real and eligible without any errors because if there are any errors in documents, then it might lead to the rejection of your loan.

3) Check Foreclosure Rules


Getting a credit according to your terms and conditions is possible, but before loan approval, you must check foreclosure rules if you want to pay your loan amount with interest before the tenure ends.

Foreclosure rules are implemented by every loan lender and receiver; it is a document signed by a judge that has every detail of the loan, including the foreclosure rule. You must read foreclosure rules carefully because there are times you might want to pay your entire credit before tenure to relieve yourself from responsibility.

Lenders also check foreclosure rules because if you pay before the term ends, then they won’t be qualified to receive the rest of the interest. After all, you are ending your credit before tenure ends.

4) Plan Your Repayment

Before you apply for any loans, check the repayment date and interest of the repayment. Banks and loan lenders have a facility that calculates the whole interest and date of repayment once you mention the amount you want to take as a credit.

The EMI calculator will help you know how much you have to pay every month as per your tenure. Through this, you can schedule your other financial plans. Applying for credit has many terms and conditions, but checking your repayments dates and interest should be your topmost priority to keep borrowing the loan without creating any confusion.

5) Check Your Liabilities


Too much debt can lead to an uncertain future in terms of financial stability and also in the records of banks. So before applying for credit, check previous liabilities if you have taken other loans. Make sure your credit card dues, other interests of other loans as well as your income is stable before applying for a loan.

If you think that you can pay for other loans and also the one you are thinking of using for, then check your financial stability, and if the total amount of all loans and interests is less than your income, then you can certainly opt. for another loan.

6) Check Credit Score

Every loan lender and bank have their own eligibility criteria for loan borrowers. So, before applying for credit, check your credit score because the moment you ask for loan approval, your credit score will be reviewed and analyzed, and if it isn’t good, then bank/loan lenders can reject your application for credit.

This can further lead to a lower credit score. Credit score defines your eligibility and your honesty in paying loans, so before applying for any loan, make your credit score good enough that any bank/loan lender can approve your loan even if your past payments are irregular.

7) Consider Fees And Charges


Before you apply for any credits, check out fees and charges imposed by banks or loan lenders. There are many types of charges and fees like foreclosure charges, processing fees, etc. Sometimes there are higher charges than you expect, so before applying for a credit, ask about costs and fees to bank or loan lenders or check on their website for the same.

Compare their fees and charges with the credits you might receive from them. If you think these charges are reasonable for approval for your loans, then apply for it. Don’t forget to calculate total charges before applying for credit.

8) Check Rate Of Interest

Banks and loan lenders often try to put a high-interest rate with easy terms and conditions. This way, consumers/loan receivers can get attracted to take credits because terms and conditions are easy.

But paying a higher rate of interest will further lead to financial instability. It’s better to apply for credits only when the interest rate is affordable for you, and through the given loan, you can be more stable financially.

What’s more is that if the rate of interest is as per your requirement, then you can pay on time and keep your credit score good, so that in future if you want another credit, then you can get it hassle free.

These are some steps to be considered before you apply for the credit.