Loans step-by-step

Applying for a loan? Here are the steps in the process.

A pen resting on top of a loan application.

Instructions: Click each step in the loan application process to learn more.

Comparison shop

Take some time to comparison shop for your loan. When you compare loans, it can be hard to see which one will cost you the least. To make it easier, lenders are required to tell you a loan’s annual percentage rate, or APR. The APR is a number that combines the interest rate, the term, and the fees to show you the total cost of the loan. The lower the APR, the lower the total cost. Remember, the loan with the smallest monthly payment may not have the lowest cost overall.

Choose a responsible lender

Always be careful when selecting a lender. A responsible lender can help you find the right financing option for your situation so you can achieve your goals. To find a responsible lender, look for an established company with a good reputation. Ask a money-savvy friend, family member, your employer or bank for a referral. Only work with lenders who answer all your questions, put everything in writing, and give you time to shop and compare before you sign a loan agreement.

Discuss the costs and the options

Discuss the costs and the options with your lender. Carefully study the monthly payment and the APR. Then decide if you can really afford the loan. You want to be sure the monthly loan payment is an amount you can afford, but minimize the total cost of your loan if you can.

Understand before you sign

Before you sign any loan agreement, be sure to read it, including the fine print. Make sure you understand the terms and the costs. Signing a loan agreement is a serious financial responsibility. You’ll have to live up to the terms that you agree to, so it’s critical that you understand exactly what you’re signing.

Unsure? Don’t sign!

It’s very important to be comfortable with your lender and make sure you fully understand everything about your loan before you sign. If you’re unsure, don’t sign. Seek advice.

How long before they decide?

It often takes a few days for a decision to be made about your loan application. However, a bank legally has up to 30 days to respond.

Avoid payday loans

Avoid short-term loans on your paycheck (payday loans), car title, or income tax refunds. These loans typically have a high interest rate and fees. Some short-term payday loans may have automatic rollovers, which increases their costs.

The Military Lending Act (MLA) makes it illegal for creditors to grant short-term loans on a paycheck (payday loans), car title loans, and income tax refund anticipation loans to military members, their spouses, and dependents. Contact the Judge Advocate General (JAG) office on your base or post if you have questions about your rights under this law.

Instead of using short-term loans like these, consider increasing your savings so that you can cover emergencies and times when you have unexpected expenses. See the Saving Money topic.

Note: Not sure where your money’s going? Learn how to create a spending plan in the Smart Spending topic. Also you can ask your financial institution if they offer online tools to help you track expenses.

Note: The federal Equal Credit Opportunity Act gives you legal rights as a borrower without regard to race, color, religion, national origin, gender, marital status, or age.

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