The Five “C’s” Of Getting A Bank Loan

Banks use basic principals when deciding whether or not you’re a good candidate for a secured loan. These basic rules are known as the five “C’s” and are comprised of capacity, collateral, condition, character and capital. And, understanding these rules can help you prepare for obtaining a bank loan.

A loan candidates capacity refers to their ability to repay the amount of the loan. Lenders will look at the amount of money that you make each month and any previous loan experience that you have. Collateral is of course the property that you have to offer as security.

The lender will also be concerned about the conditions that you need the loan for. They will need to know what the money will be used for. Your character and how you present yourself will also be another factor in obtaining a bank loan. You will be evaluated on how trustworthy and dependable you are.

If you’re borrowing the money to use for a business, the lender will consider how invested or determined you are to make it a success. If you already have a large investment in the enterprise of time and money, the lender is more likely to see you as a good candidate to repay the loan.