How to Get a Loan from the Bank

On February 16, 2025 By newsroom Topic: Debt Advice

Applying for a bank loan doesn’t have to be overwhelming! Follow these five steps to secure a loan that works best for you.

Customer Requirements: Some banks may only lend to existing customers or those with preapproval.
Credit Score: Good to excellent credit (690+) is typically required, though some banks accept scores as low as 630.
Debt-to-Income (DTI) Ratio: Aim for a DTI under 36%, showing you can handle additional debt.
Prequalification: Many banks allow you to prequalify without affecting your credit score. This shows your potential loan terms.

APR (Annual Percentage Rate): Compare APRs (interest + fees) to find the most affordable option.
Example: A $20,000 loan at 12% APR saves $2,920 in interest compared to 18% APR over four years.
Repayment Terms: Longer terms reduce monthly payments but increase overall interest costs.
Explore Online Lenders: Many allow prequalification, providing additional options for comparison.

Tip: Use a loan calculator to estimate monthly payments and total costs.

Note: The bank will perform a hard credit check, which temporarily lowers your credit score.

Verify Key Details: Confirm loan amount, APR, repayment term, and monthly payment.
Check for Fees: Look for late payment fees or other charges.
Sign the Agreement: Many banks offer electronic signing; some require an in-person visit.

Funding Timeline: Banks typically disburse funds within a week, some as fast as the same or next day.
Deposit Options:
Direct deposit to your account.
Paper check mailed to you.

Set Up Auto-Pay: Automate payments to avoid late fees and potentially qualify for a discount.
Budget for Payments: Create a repayment plan to stay on track and reduce financial stress.

With proper preparation, you’ll navigate the loan application process confidently and find the best loan for your needs!