The process of bank loan approval can be quite daunting. You need to prepare well to negotiate for a suitable package for the loan. Whether you submit an application for the bank loan online or visit the bank, you need to have complete documents for bank loan approval.If you fail to provide complete and verified documents, your application will be rejected. You will not be able to get a loan for a new house, business, etc.
In this post, we will tell youwhat documents are needed for a personal loan.The more information you provide to lenders, the easier your loan approval process will be. Here are the six documents you must have when applying for a bank loan.
1. Credit Report
Poor credit history will get you nowhere to loan approval. Or the lenders will most likely give you a high-interest rate. Documents for a business loanshould have your credit report that demonstrates your history of paying back on time.
A good credit report will have separate entities for personal and business credit card histories. That way, a late payment on student loans and other similar events will not affect your credibility.
2. Photo ID
Your documents are incomplete if you do not have a photo ID to prove your identity. You need a photo ID such as a driver’s license to verify to the lenders that you really are the person you are claiming to be.
3. Bank Statement and Assets
When assessing your risk profile, lenders would want to have a look at your bank statements and documentation of assets. These documents include your investment assets, life insurance, etc. For taking a business loan, your bank statements should reflect the fact that your business is actively earning revenues.
When applying for a mortgage, your bank statement proves that your down payments have been in your account for at least a few months and did not just show up overnight.
4. Income Statement
Lenders may require to check your pay stubs and income statements of a few months or so. Income statements are necessary when the lenders want to weigh your current earnings, which is another important factor for your loan approval. In case you are self-employed or have other sources of income, you must present documents for bank loan that show direct deposits and proof of your income.
5. Tax Returns
Tax returns of one or two years show lenders that your annual income is consistent with the reported earnings. Tax returns also illustrate the performance of one’s business. If your business is at its early stage, you can have your tax returns look like what they will seem in a year.
6. Renting History
Documents for mortgage applications need a proper renting history to show to the lender. This is especially important for those who do not currently own a house and need a bank loan for a mortgage. Renting history is also valuable for those applicants who do not have an extensive credit history.
Wrapping Up
Here were the details of what documents are required for a bank loan. Whether you want a personal loan, business loan or a loan for mortgage, most of the documents are basically the same. However, you need certain paperwork to show the credentials of your business and income when applying for a business loan.
