At some point or the other we all use financial services like loans in our life. If you still haven't used it, you might be wondering how you go about applying for a loan.
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When you wish to apply for a loan, the first step in the process is conjuring up a decent looking loan application. This is especially the case when the lender does not have or you do not have access to an application form. However, you no longer need to wreck your brains trying to think about what to write in the loan application. Help is at hand. There are several websites on the internet that are dedicated to loan applications. You can download ready templates for loan applications from here. But where did the application procedure originate from? What is the history of loan applications?
History & Origin
Lending services have been in existence since hundreds of years now. The Romans and the Greeks were said to be excellent money lenders. However, the more modern form of loans originated just a couple of hundred years back and financial institutions and banks came into the picture. Most people applying for a loan created an application themselves in the earlier days. The need for a well detailed and structured loan application was felt as most applications were structured in a haphazard manner. They lacked important details like the gross income, employers' name and loan amount. Once a standard application form was created, the loan procedure became far smoother. This eased up the process for both the lender as well as the borrower.
Applications Based on Loan Types
The application also depends on what kind of loan the borrower is applying for. For example, a loan application for an auto loan will differ from the loan application for a mortgage loan. So let us look at the different types of loans and the applications.
Home loans or mortgage loans are the commonest type of loans that are used around the world. The loans can be of the secured or the unsecured variety. In secured loans, you pledge security collateral against the loan amount whereas in unsecured loans, you do not have anything to pledge as security. In the loan application for secured loans, details pertaining to the security collateral must also be discussed along with the other details.
Auto loans also have pretty much the same requirements as far as the loan application is concerned. However, details about the vehicle that you wish to purchase might also be needed. Some lenders also look at the estimated value of the vehicle. What you need to understand is that the loan application is nothing but a pre-screening test in which the lender will look at your basic credentials. Detailed information like the credit score etc will come much later.
Bad credit loans on the other hand will require much more details from you. Since it is certain that you have bad credit, some details pertaining to your current financial situation might be asked for. Also required might be other important details like your current income source, employers address etc. If you have filed for bankruptcy in the past, then details pertaining to that might also be required.
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