How to Qualify for a Personal Loan at a Lending Institution
Feb 15, 2008 L. Marie Dubuque
Find out the annual percentage rate on a bank loan - Stockxpert
Find out the annual percentage rate on a bank loan - Stockxpert
Want to consolidate credit card debt or need a loan to pay for emergency expenses? How to get an unsecured loan at the bank.
It used to be, when you needed a loan you went down the street and talked to a friendly banker, and it was a done deal. Now, with lenders tightening their belts, and banks skittish about taking on customers with little or no payment history, getting a personal loan is no easy task.
How to Approach a Bank for a Personal Loan:
* Start with a local lender. The bank down the street is still your best bet. A lending institution in your own neighborhood is more likely to lend you the cash. Your chances are much better is you have a history with the bank. If there is a teller you always deal with, talk with him/her first. If that person knows you, even only as a familiar face, he might put in a good word with the manager.
* Plead your case matter-of-factly. If the reason you need a loan is for medical expenses, you don’t need to go into a lengthy dialogue as to the nature of your impending surgery. A simple statement, "This is for elective surgery," will suffice. Be professional and courteous. Point out your long-standing history with the bank, and a stellar employment record wouldn’t hurt either.
* Negotiate the interest rate. Do some research first. Find out the prime rate before you walk in the door. So even if you are offered a loan, make sure the APR will make it worthwhile. If the bank is only offering a rate of 18 percent, go somewhere else. You can even find a credit card that offers a better rate than that.
* Consider a second mortgage. If you own your own home, a home equity loan or line-of-credit may be your best option. But try for an unsecured personal loan first. Remember, if you fail to pay a second mortgage or HELOC, you could lose your home.
* Find out about loan processing fees upfront. Many lenders will charge you "points." One point is usually equal to one percent of the loan amount. So, if you’re planning to consolidate credit card debt, keep in mind the processing fees before you sign the paper work. You may be better off finding another credit card with a low introductory rate. Just pay attention to balance transfer fees.
Finally, ask yourself if you really need the loan. Is this something you could save up for? Or if you’re trying to lower your credit card bills, could you contact the card issuer and try to negotiate a lower rate? Chances are, you may not need this loan as badly as you think you do.
Read more at Suite101: Applying for a Bank Loan: How to Qualify for a Personal Loan at a Lending Institution | Suite101.com http://www.suite101.com/content/applying-for-a-bank-loan-a44754#ixzz1KgE4Nsxl
How to... get a bank loan
How to... get a bank loan
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What's the best way to approach your bank manager for money? "The classic joke is on all fours, of course," says Steve Everhard, of the entrepreneurial advice team at the business consultants Grant Thornton.
A more serious answer is the boy scout's motto – be prepared. Know what you want; understand what the bank might be willing to offer and on what terms; and understand your actual or potential business from top to bottom and from inside to out.
"The issue, at the moment, is being very sure of your own cash position," continues Everhard. "If you don't do your homework, there's no point in going to the bank. Go to the bank with a plan.
Related articles
* The independent firms poised to lead Britain out of recession
* Video: Independent BusinessExtra interview
* Twittering your way to success
* David Prosser: Leading the country out of recession
* Hamish McRae: ‘Independent businesses will create most of the net jobs in the next five years’
* Look to the clouds for a silver lining
* Adventures in micro-business
* Jargon buster
* Soapbox
* Shoppers flock to value stores
* Search the news archive for more stories
"Times are hard, and getting money out of your bank is hard. The bank is going to want to be very sure that you are doing all the right things to protect the business and to protect the bank's exposure. You always have to look at it from the bank's perspective."
Honesty is one of the best principles with a bank, believes Everhard, especially where the business is already trading. "You have to be open about why you need the loan in the first place," he says. "What is happening in the business? Was this expected? What the banks are looking for at the moment is openness. But lots of businesses don't feel they can be open at the moment."
Businesses that are already trading should in any case consider carefully whether they really need to raise some extra cash. Banks will not want to lend to a company if the money it needs is locked up in the business because of poor cash flow and credit management. "Make sure that your own cash management is good first, and then go to the bank," advises Everhard.
The most important thing is preparation, stresses Stephen Alambritis of the Federation of Small Businesses. "Good information, top knowledge, up to date," he says. "If it's an existing business – how it's doing. If it's brand new, what it's going to do.
"The other thing is to show your personal commitment, with personal guarantees, your time, putting your house on the line."
It is important, stresses Alambritis, to support yourself with an excellent professional. "Arm yourself with a good accountant you have known for a long time," he suggests. "If you belong to a trade association with a warranty, put that into the pot. And be focused."
It is also important to think about how to impress the bank manager on a personal level. "If a meeting is arranged, don't cancel at all costs," says Alambritis.
Bank managers have their own preconceptions and prejudices. Alambritis suggests potential borrowers ask around to find out which managers are most sympathetic or hostile to particular sectors. If one manager has a reputation for being sceptical about the prospects for care homes, it makes sense to arrange a meeting with a different manager at a different branch when seeking funds for a care home proposal.
Even within the same banking group, individual bank managers have various approaches, which can be the difference between being funded or rejected, explains Alambritis.
It is also important before a meeting to look at the British Bankers' Association website to see banks' charging structures for loans and overdrafts. Knowledge of standard terms helps the potential borrower to negotiate lower charges and will also impress the manager that this is a person who prepares. "Challenge what you are being offered in a friendly way, but firmly," advises Alambritis.
Rosana Mirkovic, an SME policy adviser at the Association of Chartered Certified Accountants, is another who stresses the need to be on top of your business brief. "It's good to have enthusiasm and passion for your business, but you also need to back it up with evidence," she says. "Perhaps testimonials from customers, or show your past experience from your previous work.
"You have to have very, very good cash flow forecasts, especially now. Run these past someone – we would say an accountant, of course. Get them checked. Make sure you can answer tricky questions about falling demand, or what will happen if your orders decrease by 15 per cent. Plan ahead for that worst-case scenario."
The point is emphasised by Everhard. "Before you go to the bank, do everything you can," he says. However, even that is not a panacea, he acknowledges. "You still might not get any money, but you do stand the best chance."
GOVERNMENT ENTERPRISE FINANCE GUARANTEE (EFG) SCHEME
SMEs which have difficulty in obtaining funding from banks should consider seeking support under the EFG, suggests Rosana Mirkovic. This provides government guarantees for up to 75 per cent of loans of £1,000 to £1m, for up to 10 years. Borrowers must pay a guarantee premium of 1.5 per cent in the first year and 2 per cent in subsequent years.
Business Email Marketing
Email marketing to fit your needs.
Start now w/ iContact Free Edition!
iContact.com/Free
HSBC Credit Card Offers
home&Away gives you discounts at
19,000+outlets in 180+destinations.
www.homeandaway.hsbc.com
Offshore Bank Account
Personal, Corporate and Investment
Bank Accounts Opened Worldwide.
www.myoffshoreaccounts.com
#1 China Wholesale Store
Wholesale 1000's of Items from
120,000 Verified Sellers.©2004-2011
DHgate.com
What's the best way to approach your bank manager for money? "The classic joke is on all fours, of course," says Steve Everhard, of the entrepreneurial advice team at the business consultants Grant Thornton.
A more serious answer is the boy scout's motto – be prepared. Know what you want; understand what the bank might be willing to offer and on what terms; and understand your actual or potential business from top to bottom and from inside to out.
"The issue, at the moment, is being very sure of your own cash position," continues Everhard. "If you don't do your homework, there's no point in going to the bank. Go to the bank with a plan.
Related articles
* The independent firms poised to lead Britain out of recession
* Video: Independent BusinessExtra interview
* Twittering your way to success
* David Prosser: Leading the country out of recession
* Hamish McRae: ‘Independent businesses will create most of the net jobs in the next five years’
* Look to the clouds for a silver lining
* Adventures in micro-business
* Jargon buster
* Soapbox
* Shoppers flock to value stores
* Search the news archive for more stories
"Times are hard, and getting money out of your bank is hard. The bank is going to want to be very sure that you are doing all the right things to protect the business and to protect the bank's exposure. You always have to look at it from the bank's perspective."
Honesty is one of the best principles with a bank, believes Everhard, especially where the business is already trading. "You have to be open about why you need the loan in the first place," he says. "What is happening in the business? Was this expected? What the banks are looking for at the moment is openness. But lots of businesses don't feel they can be open at the moment."
Businesses that are already trading should in any case consider carefully whether they really need to raise some extra cash. Banks will not want to lend to a company if the money it needs is locked up in the business because of poor cash flow and credit management. "Make sure that your own cash management is good first, and then go to the bank," advises Everhard.
The most important thing is preparation, stresses Stephen Alambritis of the Federation of Small Businesses. "Good information, top knowledge, up to date," he says. "If it's an existing business – how it's doing. If it's brand new, what it's going to do.
"The other thing is to show your personal commitment, with personal guarantees, your time, putting your house on the line."
It is important, stresses Alambritis, to support yourself with an excellent professional. "Arm yourself with a good accountant you have known for a long time," he suggests. "If you belong to a trade association with a warranty, put that into the pot. And be focused."
It is also important to think about how to impress the bank manager on a personal level. "If a meeting is arranged, don't cancel at all costs," says Alambritis.
Bank managers have their own preconceptions and prejudices. Alambritis suggests potential borrowers ask around to find out which managers are most sympathetic or hostile to particular sectors. If one manager has a reputation for being sceptical about the prospects for care homes, it makes sense to arrange a meeting with a different manager at a different branch when seeking funds for a care home proposal.
Even within the same banking group, individual bank managers have various approaches, which can be the difference between being funded or rejected, explains Alambritis.
It is also important before a meeting to look at the British Bankers' Association website to see banks' charging structures for loans and overdrafts. Knowledge of standard terms helps the potential borrower to negotiate lower charges and will also impress the manager that this is a person who prepares. "Challenge what you are being offered in a friendly way, but firmly," advises Alambritis.
Rosana Mirkovic, an SME policy adviser at the Association of Chartered Certified Accountants, is another who stresses the need to be on top of your business brief. "It's good to have enthusiasm and passion for your business, but you also need to back it up with evidence," she says. "Perhaps testimonials from customers, or show your past experience from your previous work.
"You have to have very, very good cash flow forecasts, especially now. Run these past someone – we would say an accountant, of course. Get them checked. Make sure you can answer tricky questions about falling demand, or what will happen if your orders decrease by 15 per cent. Plan ahead for that worst-case scenario."
The point is emphasised by Everhard. "Before you go to the bank, do everything you can," he says. However, even that is not a panacea, he acknowledges. "You still might not get any money, but you do stand the best chance."
GOVERNMENT ENTERPRISE FINANCE GUARANTEE (EFG) SCHEME
SMEs which have difficulty in obtaining funding from banks should consider seeking support under the EFG, suggests Rosana Mirkovic. This provides government guarantees for up to 75 per cent of loans of £1,000 to £1m, for up to 10 years. Borrowers must pay a guarantee premium of 1.5 per cent in the first year and 2 per cent in subsequent years.
