4 Signature Loan Application Tips: What to Tell the Lender

The signature loan application process, if approached correctly, can get you a loan faster and easier and be the foundation of a good relationship with your lender. For most lenders, the lending rules can be flexible depending on the bank’s appraisal of you as a potential borrower. The following four tips of what to tell the lender can help you make the best impression.

You Are Prepared

What is a signature loan? As the name implies, it is a loan made on the basis of your signature on the application. There is no collateral or co-signor. Typically, signature loans are made to very good credit risks or to people with whom the lender has a relationship. But with or without these on your side, approach the signature loan application only after preparing to meet your lender.

Do not approach a lender you know won’t lend to those in your position. If you have less than stellar credit and the bank or other institution is known for tight credit restrictions, don’t waste their time.

Have all your documentation ready. Signature loans often are made on the basis of your employment history. Bring pay stubs, tax returns and W-2 forms for two years to document your income.

Get personal and professional references, preferably from someone known to your lender’s firm, and bring those with you.

Be neat in appearance and make sure your documentation looks professional.

You Understand the Loan

Because there is no collateral, signature loans are seen as riskier by the lender. All lending is based on risk. The greater the perceived risk by the lender, the higher the interest rate will be on the loan and the more restrictive the loan terms.

Let the lender know that you know the facts behind signature loans. The confidence the lender has in you can make a difference in a signature loan application. If you are negotiating for a low rate but have no collateral, bad credit or no relationship, the lender will not take you seriously.

You Have More Than Is Required

If there is anything you have, even though it is not required by the lender, document it and include it in your signature loan application package.

As an example, you might have sufficient equity in your home to get a home equity line of credit. There can be a variety of reasons - ranging from personal preference to needed flexibility to sell the home - that you might not want to pledge that equity as collateral. But you can document the collateral to your lender.

You might have several years of consistent performance bonuses in your job. While there is no guarantee you will receive that this year, you can show the lender the bonus history, how you earned it and how you are on track to earn it again.

The goal is to build lender confidence through the signature loan application process.

You Have a Plan

Show the lender you are asking for a certain amount of a money that is for a certain purpose. Document your ability to repay the loan at a fair interest rate and over a given payout term. Show that even in the normal ups and downs of your financial life, you have the ability to repay. Your fact-based plan will build lender confidence.



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