Personal loans can be secured for a variety of purposes, at varying interest rates and for differing lengths of time. Cars, home improvements, education, bill consolidations and mortgages all are forms of personal loans. Although you need to complete an application, some banks may also request a letter in addition to any other paperwork or documentation. Don't fret about such a requirement. Use it as an opportunity to state your case, to summarise your financial circumstances and the reason for the loan, to tout your creditworthiness, and to include personal information not detailed on the application.
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Things you need
- Attachments or copies of documents
Use an accepted business-letter format, including the bank's address, the date, and the loan officer's name in the upper left-hand corner of the paper.
Personalise the letter. Don't create a form letter (easily recognisable by loan officers) that is transparent in its purpose, namely to send to numerous potential lenders. Make references to the bank, the loan officer (if you've met or you know her from previous business) and the community.
Get to the point. After a brief opening paragraph in which you introduce yourself ("My name is John Smith. I'm a lifelong resident of Elk City and grew up just blocks from your bank."), state your business. Summarise your loan request and the reasons for it. You might want to refer to your application, writing "As you can see on my application, I'm seeking a loan of £3,250 in order to consolidate various bills, including a home-improvement loan that your bank provided three years ago."
Summarise your repayment plan. Banks appreciate the fact that you've thought through your financial obligation and have developed a payment strategy.
Refer to your credit standing, using any credit scores that may already appear on your application. Don't be afraid to toot your own horn if you have an exceptional credit history.
Include your current employment situation. Emphasise the fact that you've been employed with the same company for 15 years (if that's the case), or perhaps point out that you've been employed in the same field or industry for a long time. This can help establish you as a stable, responsible citizen.
Say a little bit about your personal life, taking care to weave the information into the loan request. For example, you could write "After the loan is re-paid in three years, I'll have the opportunity to devote our financial resources to my twins' tuition costs, since they'll be starting college soon afterward." Ask if the bank would like personal or business references and eagerly offer to supply them.
Wrap up the letter by referring to any documents or attachments you've included, such as a copy of your credit report. Thank the officer for her time and consideration, and tell her you look forward to hearing from her. Close by assuring her that you'd be happy to provide any further information as needed.
Sign the letter. Include contact information, such as your address, phone number and e-mail address.
Tips and warnings
- Use contractions to keep the letter from sounding stiff. There's nothing wrong with writing "I'm" as opposed to "I am." You're asking for a loan, not drafting an amendment to the Constitution.
- Have someone you trust proofread the letter before finalising it. Re-reading it yourself is fine, but a second set of eyes is invaluable. Don't rely on a spellcheck program. Most are woefully inadequate in detecting many grammatical errors, usage issues, and subtle language inconsistencies and faux pas. Some programs detect non-existent errors, offering incongruous and even blatantly wrong suggestions.
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