There are two main steps in the overall loan process: loan origination and loan servicing. Loan origination focuses on all of the steps up to the approval of the loan. These include:
- Shopping for a lender or lenders
- Determining the loan amount, and the intended use of the loan
- Preparing financial and legal documents for the loan application
- Negotiating with lenders regarding loan amounts, payment terms, and interest rates
- Filling out loan forms and waiting for approval
- Paying the required loan fees
Loan servicing involves the actions taken after the loan is approved, including receiving loan amounts, making monthly payments, and adjusting terms if needed. The exact process may be different depending on the type of loan.
What Are Some Tips That Can Increase My Chances of Getting a Loan?
There are several steps you can take to increase your chances of getting a loan. For example, you should:
- Prepare your credit score: This includes “repairing” any negative aspects of your credit that you can such as outstanding debt.
- Determine EXACTLY how much you will need: If you are applying for way more than you can afford to pay back, you likely will not be approved.
- Avoid short-term “bad credit” loans and payday loans, which can be associated with higher interest rates. In the long run, these can lead to more debt.
- NOT apply until you are ready to commit to that lender: Applying to a loan can negatively affect your credit score. If you are applying to multiple loans, this may reflect negatively on your credit.
It sometimes helps to apply to the same lender you have worked with in the past. They will usually have your info on record, and may offer you some deals if you are a preferred or valued customer.
What If I Have a Dispute over a Loan?
Loan disputes may often require legal action to fully resolve. Many disputes involve non-payment or defaults, or other types of issues. In some cases, a lawsuit may be filed, resulting in a damages award to reimburse the non-violating party for losses. If you are involved in a lawsuit, you should prepare all the loan and financial documents that might be related to the issue at hand.
Do I Need a Lawyer for Help Getting a Loan?
Getting a loan can involve many different steps, and the overall process can be complex, especially for higher loan amounts. It may be in your best interests to hire a finance or bankruptcy lawyer if you need help getting a loan. Your attorney can research the laws in your state to determine what your best options might be. Also, if you need to file any legal claims due to a loan dispute, your lawyer can represent you in court.