Loan Application Forms: The Complete Guide
We may not always have the necessary funds to accomplish or purchase certain things. In such cases, people and businesses/firms/institutions choose to borrow money from lenders. The process of lending or accepting a loan occurs when a lender offers money to an individual or corporation with a guarantee or based on faith that the receiver would repay the borrowed money with certain extra advantages, such as an interest rate.
A loan has three components: the principal or borrowed amount, the interest rate, and the term or time the loan is granted. Most of us prefer to borrow money from a bank or a reputable non-banking financing business (NBFC) since they are constrained by government laws and are reliable. Lending is a primary financial product offered by any bank or NBFC (Non-Banking Financial Corporation).
What is a Loan Application Form?
Loan application forms are paperwork that includes detailed information on the borrowers. The form typically requests personal, financial, and employment information from the applicant, as well as information about the loan amount, purpose, and repayment terms. The lender uses the information provided to assess the applicant's creditworthiness and determine whether to approve or deny the loan request.
Lenders use them to decide whether to approve or reject loan requests. While applying for a financial loan, the borrower must submit personal financial information on the paperwork. By collecting the borrower's information in an online form and transmitting it to the lender, online loan application forms are the latest means of enhancing the procedure.
Types of Loans
A good understanding of loans is important because there are various types of loans available. ABCFinance can help you understand the different types of loans and determine which one is right for you. Here are some of the most common types of loans:
A) Home Loan
Home loans are intended to provide funding for the purchase of a home/flat, the construction of a house, the renovation/repair of an existing house, or the acquisition of a plot for the construction of a house/flat. In this instance, the lender will hold the property and transfer possession to the rightful owner upon completion of repayments.
You can get a personal loan if you have a cash need. A personal loan may be used for everything from settling an old debt, traveling on vacation, funding for a down payment on a house/car, medical emergencies, or acquiring large-ticket furnishings or electronics. Personal loans are granted based on the applicant's previous connection with the lender as well as their credit score.
C) Education Loan
Education loans are financial products that help borrowers further their education. An undergraduate degree, a postgraduate degree, or any other diploma/certification course from a reputable institution/university may be pursued. To obtain the finance, you must have the entrance permit issued by the university. Both domestic and foreign courses are eligible for funding.
D) Vehicle Loan
Automobile loans help people buy two-wheelers and four-wheelers. Also, the four-wheeled vehicle might be new or old. The lender will compute the loan amount based on the vehicle's on-road pricing and road statistics. Because the bank seldom provides 100% financing, you may need to prepare a down payment. The lender will own the car until full repayment is achieved.
E) Loan Against Asset
Individuals and corporations borrow money by pledging property, insurance policies, FD certificates, mutual funds, shares, bonds, and other assets, similar to pledging gold. The lender will issue a loan with a margin based on the value of the pledged assets.
The borrower must make timely payments in order to retain possession of the pledged assets at the conclusion of the term. If this is not done, the lender may liquidate the assets to recoup the defaulted funds.
Lenders Consider Crucial Aspects Before Approving Loan Application Forms
A) Income and Employment History
Your monthly or yearly income, as well as your job history, are important factors in a loan acceptance. The lender may or may not be confident that you will be able to repay the loan based on your income and income stability in the form of consistent and steady job history.
Even if you are self-employed, the lender expects that your firm has been functioning well for a few years and that your turnover is sufficient.
B) Credit Score
The lender will use your credit score when considering whether to proceed with your application or reject it at the initial stage. This is especially true with regard to unsecured loans.
Because a credit score shows a borrower's credit history, the lender examines the borrower's repayment history to determine whether the borrower can repay on time or will default on payments. The lender's decision is based on the results of the necessary analysis.
The lender may decide on the interest rate for your loan based on the collateral you offer and its current market worth. Giving collateral makes the transaction safer in the eyes of the lender, which may result in more confidence and a lower interest rate. Unsecured loans are notorious for having a higher interest rate than secured loans.
D) Debt-to-Income Ratio
Not only does having a strong salary matter but so does your debt-to-income ratio. If you earn Rs.1 lakh per month and your debt repayment responsibilities exceed Rs.75,000, you will be denied a new loan since you would need the remaining income to cover your home expenditures.
As a result, regardless of your salary, you must have a low debt-to-income ratio so that lenders believe you have enough cash on hand each month to make the payments as well as cover household needs.
E) Down Payment
The money you've saved and your ability to stick to your savings plan for a down payment will boost the lender's confidence in you. The smaller the loan amount necessary, the larger the down payment.
Benefits of Loan Application Forms
The following are the top five benefits of digital loan application forms:
A) Ease of Documentation
The online loan application method enables you to scan and submit all required papers immediately to the web portal. You don't have to carry the originals around with you, reducing the risk of damage or loss and avoiding the inconvenience of making photocopies. The whole application procedure is done online, from filling out the application form to uploading the documentation.
B) Saves Time in Emergencies
Personal loans are frequently used in times of crisis when quick access to finances is critical. Internet loan application forms simplify the whole process, from evaluating eligibility to submitting required paperwork. There is no need to waste time visiting lenders and standing in lines. The entire procedure may be carried out from the comfort of your own home.
C) Ease of Comparison
It might be difficult to keep track of all the incentives given by various financial institutions throughout the standard loan application procedure. With an online loan application, you can quickly browse the internet for the finest offers in terms of interest rates, processing fees, loan periods, and eligibility criteria, and select the lender giving the conditions that are appropriate for your needs.
D) 24*7 Service and Faster Approvals
You don't have to wait for the bank to open or for the manager to find time to meet with you. You may submit your request for a loan through an online loan application form at any time of day or night. The majority of the processing is done by computer software and provided your paperwork is in order and your CIBIL score is good, you should receive clearance for your online loan application within a few days. The sanctioned sum is also instantly sent to your bank account.
E) Easy Tracking
All of your loan information is easily accessible via online platforms. You do not need to rely on anyone or even leave your house to learn the status of your loan application. The lender's website allows you to simply follow the status of your application.
Modify our online loan application form template in LeadGen App Form Builder and distribute it as needed. This multi-page loan application template covers all of the necessary background information from loan applicants in a neat, yet informative format. Personalize it even further by deleting or adding fields with a simple drag and drop, selecting a variety of themes, or utilizing other widgets to match your needs. You may also integrate your loan application form with third-party apps.