How To Get Loans
There are many instances in life when you will need a lot of money to cope with the situation. The situation may be to afford your child’s higher education or start a fresh new business. It is not necessary that you must have that amount at that instance, but that does not mean that you will have to let go of that situation due to a lack of funds. In such cases, you need to appeal for loans from different banks and money-lending institutions that will support your cause. For applying such loans, you need to understand the details of such a loan application, and the following content will explain to you all the nuances of it.
Types of loans that you can apply
Before learning about the procedure of how to get loans, you need to know about the different types of loans that you can apply for. The types of loans that you can apply for are:
Personal loans
Personal loans are generally meant to meet any individual needs. It does not have any designated purpose to fulfill, and can also be used to pay off any outstanding debts like credit card debts. The chances of obtaining a personal loan depend on your credit history.
If you want to know about how to get a personal loan, you need to go through the following steps:
- Firstly, identify the loan amount you need. Depending on your requirement, fix the amount that you wish to apply.
- Secondly, you need to check whether you are eligible for the loan application. It depends completely on the bank, which will offer you the loan amount. Every bank has its schemes with varied possibilities, and you need to check the plans of your bank of interest. It as well as depends on your credit score, and therefore, you calculate your loan eligibility accordingly.
- Thirdly, you need to calculate the monthly installments that will be feasible for you to pay back the loan. You need to calculate how much you must pay each month to repay the loan. Also, you need to understand that there are interest rates attached to the loan, and the longer you take to repay the loan, the more interest you have to pay.
- After doing all the calculations, you need to approach your bank and submit all the valid documents that are required by your bank to process your application. You can physically go to the bank branch or can apply online if your bank has the provision to do so
Business loans
Business loans are meant to support any start-up. Most banks provide small business loans to entrepreneurs for starting their business. If you wish to start your own business and want to appeal for a business loan, then you need to know how to get a business loan. The following steps will help you in this matter.
- First, you need to ask yourself why you need the loan. This question will inevitably be asked to you by your lender, and you need to place your answer amongst the following four categories:
- To give a head-start to your business
- To manage your day-to-day expenses incurred in your business
- To provide a boost to your already established business
- To support any kind of emergency and provide your business with a safety cushion.
- Second, you need to decide which loan is actually best for you. You should not expect any bank to fully support your business in the first year since most banks look towards free cash flow that will help you repay your loans. For such purposes, you can look towards microlenders who can support your business. Moreover, if you wish to apply a small business loan for your start-up, you might get support from banks if your business presentation attracts them. Get hold of a few options of lenders, compare amongst their schemes, and then put forward your loan application.
- In the third step, you need to check whether you qualify for the loan that you are applying for. The first thing that you need to check is your credit score. The higher is your credit score, and more are the chances of you getting the loan from a bank. The second consideration is your experience in the business. Most lenders will ask for this aspect, and the longer you will be in business, the higher are the chance of you qualifying for the loan. Lastly, you need to consider the monthly turnover of your business, and whether you will be able to repay the loan in time. Based on your business accounts, the lenders will decide whether you will be eligible for the loan or not.
- The last step for you will be to gather all the required documents needed for your loan application. In most cases, the lender asks for your business and personal bank statements, tax returns, business financial statements, and legal documents pertaining to your business, like commercial lease, articles of incorporation, franchise agreement, to name a few.
Instant loans
Several money lending institutions provide instant loans. If you want to know how to get instant loans, you need first to check the company or the bank to which you wish applying for a loan. Look into their policies, get all the documents, and apply for the same. In most cases, instant loans are given for small amounts. Moreover, since most people have their mobile number linked to most of their business policies and bank accounts, it becomes easy for the loan-providers to access this information and check for the eligibility of the loan applicant. This procedure saves a lot of time and allows you to get your loan instantly.
Mudra loans
According to the Pradhan Mantri Mudra Yojana, one can apply for mudra loans upto Rs 10 lakhs. The loan has been made available for owners of small manufacturing businesses, artisans, vegetable and fruit sellers, shopkeepers, and for those who are associated with various activities related to agriculture, pisciculture, poultry, fisheries, etc. If you want to learn how to get mudra loans, you need to follow the essential points:
- The loan is divided into three categories:
- Sishu- loan amount upto Rs. 50000 to support start-ups and business in its early stages.
- Kishor- loan amount upto Rs 5 lakhs for established businesses seeking additional funding.
- Tarun- loan amount upto Rs 10 lakhs for well-established businesses that meet the eligibility criteria.
- You need to go through the different norms and conditions, get all your documents ready, and then apply for the loan from a suitable loan provider.
There are several loan providers available. If you wish to appeal for a loan from a bank, then you need to know how to get a loan from the bank that you choose. You can also get the loan online if you already know how to get a loan online. All you have to do is to check their rules and regulations and gather your documents accordingly. Then you can either submit these documents or upload the documents online. We hope you have now understood how to get a loan in idea, and now it is time for you to put your knowledge into action. Prepare yourself for your loan application, and we wish you all the best for its acceptance.