Need a Loan, Forget About the "Good Old Days"

Remember the days when you could walk into your bank and with a simple hand shake or your family history with the bank and you could get any amount of loan, within reason, in a very short period of time and without a lot of paperwork? Unfortunately, those days of easy lending are gone. With the requirements of 20% down payment, financial history, collateral requirements, etc., obtaining a loan from a financial institution has become quite an ordeal. With this in mind, a potential borrower should have several lending requirements in mind when applying for a loan.
Banks want to lend money to persons with a high credit rating. A high credit rating means that you have a good payment history on previous or current debts. Therefore, it is imperative that you maintain your credit score at the highest possible rating.
Banks also are very interested in whether a prospective borrower has the means to repay the loan. In this regard, a lender will want verification of sources and amounts of income. Do not be surprised if you are asked to provide copies of tax returns, pay slips, financial statements, nontaxable sources of income, etc., to support a repayment income stream.
Generally, if a borrower has passed the test on being able to repay the loan from income sources, banks and other financial institutions also require the borrower to maintain sufficient collateral for the loan. Banks want to be protected from losses by having sufficient collateral to cover the loan amount should the borrower’s income stream no longer be available to service the debt. As an alternative to the collateral requirement or as an addition to this requirement, a borrower may also need or be required to obtain a co-signer on the loan. If a co-signer is required, they too will need to pass all the lending requirements that the borrower has to pass.
As you can see, the “Good Old Days” of getting a loan are gone.  A lot is required in putting together a loan package that will be satisfactory to a financial institution. In this area we are available to help and guide you through the endless requirements. 
/posted by Wayne Sturgeon, CPA