To smoothly expand and take advantage of the financial market, you will need a good loan application letter. It maturely reads out how much you need and strongly convinces the lender why you are a good investment risk-taker.
However, do not forget other ingredients that will spice up your loan application letter and make it stand out to quicken loan approval.
In this article, we will explore how to write a loan application letter.
- What is a loan application letter?
- How to write a loan application letter
- Format of writing a loan application letter
- Tips of writing a loan application letter
- Contents of loan application letter
- Different loan application letter
You need to be informed. A loan application letter is a tool you might need from time to time, and it would definitely give you the edge you need.
What is a loan application letter
A loan application letter is a handwritten or typed tool that helps your lender decide about your loan request. You write a loan application letter when the borrower needs monetary help from a lender to set off some bills.
How to write a loan application letter
In writing an application letter for a loan, take note that it is six paragraphs or fewer. Each item or topic is detailed in each paragraph concisely. The first paragraph contains the loan amount, followed by a description of your business or why you need the loan.
More so, the purpose of the loan is so important and needs to be highlighted properly. Add how you intend using it, amount you have invested in your business, if it’s a business loan application letter.
Conclusively, it is pertinent to know the loan lender’s name or the bank manager’s name or name of the person who handles the loan application and their titles. Address the letter in his name.
7 Format of writing a loan application letter
The general format used in writing includes:
- To (the loan lender’s name, bank manager’s name, address of the bank/loan lender)
- From (your name and your address)
- Dear Mr./Mrs. (the title of the loan lender or the bank manager or title of the person in charge of loans)
- I have a savings account in your bank or an M-Pesa account for (number of years) and wish to apply for (state the type of loan you need) for (clearly state your reason or purpose of the loan)
- Confident of paying as when due. I also wish to know the criteria, eligibility and requirements to receive your loan.
- Yours sincerely (write your name)
- Sign your name and write the date.
6 Tips to writing a loan application letter
To write a loan application letter, there are tips to note:
- Know that it is formal, select your words and phrases carefully
- Make your words easy to understand and comprehend
- Communicate your message in a short and straightforward way
- Give a good reason for borrowing and detail it succinctly
- State your asset and liability and be honest about it
- State your intent and great desire to pay back the loan.
5 Contents of loan application letter
The contents of your application letter includes the following:
- The requested loan amount
- Why you are taking the loan
- Description of what you do
- Date of complete repayment
- Positive information about yourself
4 Different loan application letters
There are different loan application letter and they are:
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For any category of application letter, you must be polite and concise. Cleverly do not miss why you are taking the loan and how you would pay back. Show your readiness and desire in paying back the loan.