Understanding the Requirements for Applying for a Loan

Among all the financial products available on the market, loans are a good option for those looking for financing. And today more than ever, people looking to access additional funds have many options to ask for a loan that allows them to undertake a project, face an emergency or even pay their debts.

Financial services have become digitalized so there are now many options to choose what type of loan is suitable for your financial goals and your ability to pay.

At some financial institutions, you may receive a proactive invitation to avail a loan or credit. In these cases, they may not ask for additional proof because the fact that the institution offers you a loan means that they know enough about you to be able to offer you a pre-approved loan.

However, most loans work differently and if you are interested in requesting one, it is important that you know what is needed to request a loan.

General requirements to request a loan

Although the requirements for applying for a loan may vary depending on the financial institution and the type of loan, all financial institutions need to have information about you and your history to know if they can lend you money, how much, and under what conditions.

In Mexico, to apply for a loan, you will generally need to be over 18 years old and present the following documentation:

• Valid official identification, such as a voter ID or passport. If you are a foreigner, you can present your temporary or permanent residence card
• CURP and RFC
• Proof of address no older than three months. With a bill for electricity, water or any other service, you can check your current address
• Proof of income. In some cases, they may ask for proof of income to demonstrate your solvency and ability to pay. Proof of income can be a pay stub or a bank statement in your name

Supplementary requirements

As we saw, not all financial institutions or lending platforms will ask you the same thing.

In addition to the general requirements, the lender may ask you for this additional information, such as:

• Loan application. From filling out a piece of paper with your personal information to completing an online form, the process of applying for a loan may include filling out a formal application.
• Personal references or endorsement. Some lenders may request personal references to verify your identity. They may also ask you for a guarantee to ensure that the debt you acquire when requesting a loan is paid.
• Credit history. Financial institutions will evaluate your credit history to determine your creditworthiness. A good track record can increase your chances of getting a loan or getting a competitive interest rate.

If the loan you are going to request is a guaranteed loan, they will additionally ask you for the documentation corresponding to the guarantee offered.

If you are going to give your car as collateral, you need to present the invoice for the car to prove that it is yours. On the contrary, if you are going to give a property as collateral, it is necessary to present the deeds of the property as well as proof of no property debt and other services.

Read also:

What is a loan?

Financial balance: To request or not to request an educational loan?

Why is it important to know what is needed to apply for a loan?

There are several reasons why it is important to know what it takes to apply for a loan. First, knowing what documentation is required allows you to prepare all the necessary information in advance, this can speed up the application process.

Loans are often used in emergency situations and the last thing we need at that time is arrears to get the money that could help us get through. Knowing the requirements to request a loan allows you to be prepared.

Why ask for a loan?

Loans can have endless purposes. Although we all have different financial goals and you can use your loan to pay for many things, it is not advisable to take one for just anything.

The most common uses that are usually given to loans are the following:

• Debt payment
• Buying a car or a house
• Unexpected expenses
• Medical emergencies
• Studies
• Wedding, XV years, travel

As you can see, most people use a loan to cover major expenses that would otherwise be very financial burden. In any case, asking for a loan implies acquiring financial responsibility and has a cost.

It is always important to compare the available options before committing to a particular loan, as well as obtain detailed information about the requirements and conditions.

If you ask for a loan, we recommend that you take into account your payment capacity and not exceed it. Remember that taking out loans that exceed your payment capacity can damage not only your personal finances but even your credit history.

This content is part of Nu’s mission to give people back control of their financial lives. Don’t know Nu yet? Learn more about our service and our hassle-free cards, give click here.