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Loan Application Forms: What Are They?
In general, application forms are questionnaires specifically created for a certain transaction. However, if you consider taking out a loan, as a prospective borrower, you have two options: either go to a bank’s physical business location and fill out a paper application or apply on the internet using the bank’s online outlet. Because the application process is needed for any type of loans like a revolving loan (credit) and a debt instrument (mortgage or auto loan), an application form needs to be considered first. This form helps lenders assess potential borrowers by collecting the relevant information needed to qualify for the debenture. And this information is the key details about an applicant’s financial situation. From there, lenders will decide whether a borrower is fit for the payment of the debt or not.
In a report published by Experian, the US consumer debt has increased nearly 2.3 trillion US dollars as it is growing along will other debt products totaling 14 trillion US dollars in 2019.
The total sum of 474 billion Americans’ outstanding mortgage debt is 9.4 trillion US dollars in the second quarter of 2019, 162 billion US dollars more than the first quarter, according to the Market Watch.
Based on an article by Forbes, student loan debt in the US has reached 1.56 trillion US dollars in 2020. And there are 45 million Americans who owe this student loan debt, which the second-highest consumer debt category after mortgage debt.
Why Is a Loan Application Form Important?
Behind every loan approval, there stands a piece of great information about an applicant. Financial inclusion, which is the opportunity to avail equal financial services, has been a central interest for policymakers and researchers alike. However, there is less to nothing known about the initiatives of private sectors as participants for advancing financial inclusion. Say for example, when commercial banks decide whether to lend to a potential client, they consider factors including screening costs, the capacity of the applicant to repay a loan, or the time they expect the borrower to remain a client. This is an important consideration for new borrowers, as lenders will establish reliability by incurring the costs. That is why loan application forms are important because it primarily evaluates borrowers before they can avail of any loan benefits. Additionally, it ensures that every lender will invest in the right clients.
Elements of a Loan Application Form
Before creating your application forms, it is important to understand that there is no similar application form as every application process is different from each other. A single form cannot be used in several processes. It should be specifically made; otherwise, the form could compromise the convenience it could have contributed. Since there are various types of application forms, it means these important business documents are consist of different parts—called the elements. These are the labeled fields in the form in which users input the information needed. Below are the descriptions of different elements that compose a simple loan application form. Continue reading this article.
How Do You Create a Useful Loan Application Form?
Now that you know what different elements a loan application form is made up of, creating one is the next thing you should learn. You do not need to be an accountant or a bank employee to make a form like this. It may seem overwhelming because it deals with financial terms, but it is not as hard as you think. There are word processors and spreadsheet editors that you can easily access to help you organize the elements accordingly. That is why we will not teach you how to format an application form. Instead, the list below are tips intended to guide you in making a working loan application form. Find out more.
Step 1: Keep the Form on Brand
What is branding? Branding is part of a marketing plan that creates a name for a company using a design or easily that is recognizable as their belonging. This is the way customers identify a product or service and set it aside from other offers, especially those from competitors. In addition, establishing a brand name creates a true representation of who the business is, and how that business wishes to be known. Why is brand important in making a loan application form? It ensures that the document will stand for the lender’s cause (or business mission and vision) by using logos, signs, or emblems that stand for your cause. Incorporate these in your form.
Step 2: Make It Simple and Concise
If you want to get straight to your point in a way the applicants can easily understand, create the loan application form clearly and concisely by choosing the right words to put your message across. Use simple words in communicating with the loan applicants. However, using generic words with multiple meanings can send a vague message to your audience. And since the loan application form is consists of five sections, there is a good reason for simplifying it even more. Remember that not everyone likes lengthy questionnaires.
Step 3: Be Specific to Your Loan Benefits?
Showcase your uniques values in the loan application form so that applicants have the opportunity to tell how they are a good fit for the loan benefits. You can ask questions like “Why do you need a loan?”; “How much money do you need?”; “How will you pay the loan?”; and “Do you have any current or past loans?” You can even ask for their thoughts about paying the loan on time.
Step 4: Go Online
The advent of the internet is steadily turning, if not all, some business transactions into an electronic process. There are several advantages why you need to consider going online. Both website and loan app is easily accessible 24/7. Applicants do not need to wait until the physical business location opens before processing a loan application. If clients have access to the internet, applying for personal loans is more convenient and requires minimal documents. On top of that, online processes are way faster than the traditional way.
What are the different types of loans?
- Personal Loan
- Credit Card
- Home-Equity Loan
- Home-Equity Lines of Credit
- Credit Card Cash Advances
- Small Business Loans
When to use an application form?
Application forms are ofter associated with the job application process. However, this form can also be used in various transactions that require the selection of candidates. Whether they will proceed to the next stage of the process will depend on what they fill out in the form.
What is a student loan?
A student loan is money borrowed from the government or private lenders to support an individual’s education. The borrower has to repay the loan later, on top of the interest that accumulates over time. According to Forbes magazine, student loan debt in the US has reached 1.56 trillion US dollars in 2020.
Taking out a loan is a practical investment as a borrower can repay it later based on the given terms. However, loans are not given easily because before acquiring the benefits, candidates need to undergo a process that evolves around evaluating applicants, checking credit scores, considering other options, and the list goes on. If you want to streamline the process flow and save some time, get one of our loan application form templates. With this, it is easier to manage the number of loan applicants. Download now!