How Should I Prepare to Get a Loan?

Research

• Lenders like to see that you have researched and prepared a specific plan for how the loan will be used. Potential home owners should comb the market to identify the property best suited to their needs. If you're starting a business, prepare a detailed business plan showcasing your research and step-by-step plans for turning profits. If you're planning to purchase a car with a loan, have a specific auto in mind. The more you're able to demonstrate the time invested in preparing to apply for a loan, the more seriously lenders will take your proposition.
  
  

Shop Around

• Before getting a loan, spend time shopping around to learn about different loan types, repayment plans, interest rates, closing costs and prepayment penalties. By focusing on ideal lenders and preferred loans best suited to your needs, you may be able to save money in the long run.
  
  

Documentation

• Financial documents are some of the major tools lenders use to evaluate your financial health. To prepare for getting a loan, begin assembling and organizing money-related documents including bank statements, rental payment stubs, W-2 forms and Social Security income papers. If you're applying for a loan with another person, such as a spouse, that individual should also begin assembling and organizing financial documents. Lenders may also want to evaluate divorce or bankruptcy papers.
  
  

Savings

• Prepare for taking out loans by amassing savings, which indicate to lenders your ability to manage money well. For large loans, like mortgages, lenders may want to see evidence that you've saved six months of mortgage payments on top of money saved for a down payment.
  
  

Credit

• Lenders like to see how you've handled credit in the past, so prepare to get a loan by whipping your credit into shape. Run your credit history to identify old department store accounts that should be closed, call to dispute inaccurate information and pay down credit cards to lower your debt-to-income ratio. Make payments on time, and pay more than the minimum.