Glossary

• There is a whole list of words that have particular meanings when it comes to loans. Look for a loan glossary online or read about the loan process to learn what these terms mean before you start applying. APR, for instance, stands for Annual Percentage Rate, but this does not affect your loan directly. LTV stands for loan to value, or the ratio of the loan amount to what you are borrowing. There are many other unique abbreviations and words that can help you understand what you need to know about a loan.
  
  

Interest Rates

• Interest rates are often at the heart of loans. Not matter how much the loan is for or how long it lasts, the interest rate will ultimately control the percentage of profit the lender makes, and how much you will have to pay per month. This is why rates are so important and change so often. Always try to find the lowest rate, but beware of adjustable-rate loans that can go up over time.
  
  

Everything Matters

• Many people assume that their credit score is what lenders look at when deciding loan eligibility and terms. While the credit score is very important, lenders will look at your entire financial status. For businesses, lenders are very interested in other sources of capital and the business plans that entrepreneurs have. For individuals, banks look at checking accounts and current sources of revenue to make sure you can continue paying for the loan in the future.
  
  

Proof Is Vital

• You will need official documentation for everything the lender is interested in seeing. This means canceled checks, proof of other credit sources (if the lender cannot get it from a credit report) and many other types of documentation. Much of this is on a case-by-case basis, depending on how good your credit is and how thorough the lender is.
  
  

Considerations

• You should keep in mind that most people do not take the full term of a loan to pay it off. For large loans like mortgages, refinances are more common--where owners take out another mortgage to pay off the first loan and start a new mortgage, preferably with better terms. Keep in mind options like being able to refinance years in the future when you are deciding what type of loan to get.