How does a bank loan work?
The first step in getting a bank loan is filling out a formal application which is either completed in the bank, or online. Once this is submitted the bank will evaluate the loan by assessing the borrower’s affordability, their credit record, and whether they are able to put down any collateral to secure the loan. Applicants are more likely to be approved if they have a good credit record, although alternatives are available. If approved, the applicant must then agree to a repayment amount and sign a contract affirming this. The money is usually issued by crediting the borrower’s bank account.