General Criteria for Loan Application

Thousands of loan possibilities at your fingertips!

Living in the US, there are many different loan options that an American borrower can choose and pick from. Even with today’s financial crunch, all that needs to be done is to go on-line, Google the word "loan", and thousands of possibilities will appear on your screen. Each company/lender will be offering very competitive interest rates, trying to have the best and most attractive terms and conditions, marketing wise. This is in order that their offer will outreach and outperform the rest. Here, we will try to explain some of the different loans available in the market and shed some light on which loan is appropriate for whom and for what propose. In addition we will discuss in detail the criteria that the borrower must meet in order to receive the desirable loan.

Secured loan:

This form of lending is given to individuals that can offer collateral, which means they can pledge some asset as their guarantee for the loan. The collateral acts as an obligation that the borrower will repay the loan in its full amount, in the given time frame. Usually the collateral that is used for the secured loans is a home or property of the borrower. Someone in need of a large amount of money can receive up to 125% value of the collateral in cash. Although the benefit of the large sum, one should be careful before using a home as collateral since not repaying the loan back on time can cause a loss to the loaning company. To meet the criteria for a secured loan you must have a property be it a car or a house to secure the loan.

Unsecured loan:

This form of lending is given to individuals that have bad credit rating with no collateral to offer. Usually the sum of money given in this loan will be a small amount for a short period of time; therefore the interest rate can be higher than regular. The more risk is involved in the loan the higher the interest rate will be. The interest can start from reasonably priced personal loans to high risk/high interest loans. Unsecured loans come in many different shapes and forms: personal loans, tenant loans, bridging loans and payday loans (in growing interest rate order). Some loans are longer term than others and some kind of identity/financial proof is always necessary.

The requirements:

The criteria's for the different loans might slightly vary between companies, yet all have these requirements in common:

In conclusion

In the past the sole provider and formal organization that was able to lend money was the Bank. Today reality has changed, and many people do not fit the criteria's that are needed in order to obtain a loan. They may have bad credit for example. The growing need for loans on the one hand and the strict requirements/criteria's on the other hand, has lead to a naturally new form of lending to be designed for the loan market and is known by its official name: "alternative loan market" and also the sub-prime loan market.

As the name implies, these financial organizations and companies provide an alternative set of criteria's (they are stated above) for those in need with reasonable rates that allow all to enjoy a healthy financial competition between the different companies and thus the borrowers are the main beneficiaries because they can now choose the best option for themselves in this improved situation.