Obtaining a Consumer Loan
You may decide to purchase an asset, start a business, or go back to college. If you do not have the required financial resources on hand, you will have to try to obtain a consumer loan. How do you go about obtaining a consumer loan? The first step is to determine if you are going to purchase the asset, remodel your home, take a vacation, start a business, or enroll in college, that is, spend the money now. You may decide to postpone spending until a later date or not to spend the money at all. In the case of a car, you might need to decide whether to purchase or lease. If you decide to make the expenditure, you can either pay cash for the entire amount or borrow part or all of the money needed. If you decide to borrow the money, you must first select a lender.
The selection of a vendor involves several factors. Some sources of loans can immediately be eliminated. For example, you need an equity position in real estate or a cash value life insurance policy tomorrow from these sources. There may not be any mutual savings banks in your area, you may not be a member of a credit union, or a certain lender may be unwilling to offer a loan for your intended purpose.
Selecting a lender involves some “leg work”. Logic dictates that you should start with the lender that makes the type of loan that you desire and that provides the most favorable terms (for example, lowest interest rate, desired long duration). Phone calls and visits to lending institutions can provide the general information you will need. You should also consider more than one lender in the desired category. For example, if you determine that a commercial bank is your best source of funds, you should contact several commercial banks to compare loan terms. Lending institutions sometimes offer special loan deals for qualified applicants during specific time periods.
Just because you decide but one source of consumer loans is best for you does not guarantee that the lender will concur with your conclusion. The lender must determine if it should loan you the money. As a first step, the lender will provided a loan application form for you to complete, much of the information required on a credit card application is also required on a consumer loan application.