Loan commitments come after you’ve compared lenders and applied for a loan. Once your lender offers a loan commitment, you’ll be on your way to getting the funding you need. But it can look different based on what you’re applying for — here’s what you should know when you receive one.
A loan commitment is a guarantee given to borrowers that a lender has approved them for a loan, line of credit or credit card. It outlines the terms and conditions of borrowing, including potential fees and payback terms.
Receiving a loan commitment means you’re fully approved to borrow, and only need to agree to the terms to receive your funds.
Preapproval, or prequalification, means you met the basic criteria, but the lender will still need to check your credit and confirm your income. At this point, you may still be denied.
Loan commitments can take two forms: close- or open-ended.
Both types of loan commitments can be secured or unsecured. For example, a HELOC is a revolving loan commitment secured by your home, which is used as collateral. A student loan is a non-revolving loan commitment that doesn’t require you to provide collateral.
Approval for any type of loan is based on your credit, income, current debt and other requirements set by your lender.
Once you agree to a loan commitment — whether that takes the form of a loan, line of credit or credit card — and sign your loan documents, you can use your funds to cover a variety of expenses. But while the loan commitment may outline the amount you’re set to borrow and pay back, your loan contract will provide other necessary details to guide how you use your funds.
A loan commitment is the guarantee you’ll be offered funds. Read our guides to personal loans and lines of credit to learn more about the borrowing process from start to finish.
Online loans mean fast access to cash, especially if you don’t qualify with a traditional lender.
Quick turnaround loans up to $30,000 — but they’re not available in the US just yet.
Bankrate lets you quickly compare different personal loan options in one place.
Bankers Healthcare Group isn’t just for licensed healthcare workers. Compare large loans up to $200,000 with this legit online lender.
Compare 11 lenders to find one that’s a good fit for your needs.
Travel now and pay later with this unique lender that offers financing for flights, hotels, vacation packages and more.
Compare top lenders that offer personal loans with no fees for borrowers with good to excellent credit.
Get funding of up to $500,000 with the benefit of early repayment discounts for qualifying borrowers.
Get financing for your e-business for a flat fee instead of interest, only if you have a PayPal account with consistent sales. No credit check required.
Find out what Swift Capital can offer your business, with advances from $5,000 to $500K and short repayment periods that come with weekly repayment.
