Looking at loans from financial institutions specifically, when you are ready to discuss a loan, be prepared to provide detailed information about yourself. This can include the reason for your request, your income, expenses, assets and liabilities, or the amount of money which you’ve paid for a large purchase, such as a vehicle. You may also be asked to allow the financial institution to check your credit history through a credit bureau.

A credit bureau can verify your information and reliability in terms of having paid your previous and current debts on time. Clients must disclose his/her full outstanding liabilities when shifting the salary from one bank to another. Failure to disclose may result in the new bank approving loan amounts which violate the legal lending limits. *

Depending on the loan purpose and the amount required, you may be offered a line of credit, such as a credit card or perhaps a term loan. A credit card or line of credit provides you with a borrowing limit of money that you can access as required, up to that limit. The monthly repayments will vary, according to the amount of money that you have borrowed. The interest rates are much higher with these types of loans, as they are not secured against a specific asset such as a vehicle or property. With these types of loans, you also have a choice to pay the balance owed at any time without a penalty.

The other type of loan - for example a car loan, a same day loan or mortgage - is a loan where the full amount is provided in full at the time of the purchase. There is then a schedule of payments at a set amount, usually due once a month. The length of time (the term) for the loan will also be agreed, or limited by law.

The financial institution will evaluate your credit history, your ability to pay, the lawful limits on borrowing based on your income and the reason for borrowing, and if you have other assets. The financial institution may also register a claim on the vehicle or property until the loan is paid off.