Receiving notice that your loan application has been approved can be an exciting moment As a lender, you want to ensure your loan approval letters convey this positive news in a professional, clear manner
In this comprehensive guide, we’ll explain everything you need to know to craft effective loan approval letters, including:
- What to include in a loan approval letter
- Helpful loan approval letter templates and examples
- Tips for writing professionally and building relationships
Follow these best practices and you’ll be able to send loan approval letters that make a great impression on borrowers.
What to Include in a Loan Approval Letter
A loan approval letter should include certain key details to clearly communicate the good news to the applicant Here are some of the most important elements to cover
Applicant’s Name and Address – Address the letter directly to the applicant using their full name and address specified on the loan application.
Loan Details – Specify the type of loan applied for (auto, mortgage, personal, etc.), the amount approved, interest rate, fees, term length, and payment amount and schedule.
Instructions for Next Steps – Explain what actions the applicant needs to take next to accept the loan and complete paperwork. Provide contact details and a timeline.
Loan Officer’s Contact Info – Close the letter with the name, title, phone number, and email address of the loan officer or manager overseeing the application.
Expression of Thanks – Include a sentence or two thanking the applicant for choosing your financial institution.
Beyond these basics, you may also want to highlight other loan terms like payment due dates, prepayment policies, late fees, insurance requirements, and conditions that must be met before closing. Keep the letter concise but informative.
Loan Approval Letter Examples
Reviewing sample loan approval letters can help you get an idea of the proper format and content to include.
Mortgage Loan Approval Letter
April 1, 20XX
John and Jane Doe
123 Main St.
Anytown, CA 12345
Re: Loan Application #12345678
Dear Mr. and Mrs. Doe,
We are pleased to inform you that your application for a mortgage loan in the amount of $250,000 has been approved by ABC Bank. Please see below for details of your 30-year fixed rate mortgage:
- Interest Rate: 6.5%
- Loan Term: 360 months
- Monthly Principal & Interest Payment: $1,592
- Estimated Closing Costs: $6,000 (to be finalized closer to closing date)
Our loan officer Sandra Jones will be in touch within the next week to schedule an appointment to review and sign final loan documents. Congratulations on your new home! We appreciate you choosing ABC Bank and look forward to working with you.
Sincerely,
James Wilson
Vice President, Mortgage Lending
ABC Bank
555-123-4567
[email protected]
Business Loan Approval Letter
May 15, 20XX
Jane Smith
Smith Consulting LLC
456 Oak St.
Anytown, NY 12345
Re: Loan Application #987654321
Dear Ms. Smith,
I am pleased to inform you that your application for a $50,000 small business loan has been approved by XYZ Bank. Below are details of the 5-year adjustable rate loan:
- Interest Rate: 7% (initial rate, adjusts annually in May)
- Loan Term: 60 months
- Monthly Payment: $980
- Use of Funds: Operating expenses and new computer equipment purchases
To accept this loan offer, please review the final loan agreement included with this letter and return the signed copy within 10 business days. Feel free to contact me if you have any questions. Welcome to XYZ Bank and we look forward to being your financial partner!
Regards,
Michelle Lee
Business Banking Officer
XYZ Bank
555-987-6543
[email protected]
Auto Loan Approval Letter
June 1, 20XX
Mark Johnson
789 Elm St.
Anytown, WI 12345
Re: Loan Application #2468101214
Dear Mr. Johnson,
We are pleased to inform you that your application for a $25,000 auto loan for the purchase of a 2019 Toyota Camry has been approved by 123 Auto Loans. Below are the loan details:
- Amount Financed: $22,500 ($25,000 minus $2,500 down payment)
- Interest Rate: 5.99%
- Loan Term: 60 months
- Monthly Payment: $450
Please contact us within the next 5 days to confirm acceptance of this loan offer and schedule an appointment to sign final paperwork. We look forward to helping finance your new vehicle. Thank you for choosing 123 Auto Loans.
Sincerely,
Stacy Keller
Loan Officer
123 Auto Loans
555-321-4567
[email protected]
Tips for Writing a Professional Loan Approval Letter
Follow these tips to ensure your loan approval letters make a good impression and clearly communicate key details:
-
Use a standard business letter format with your institution’s letterhead.
-
Address the applicant formally (e.g. Mr., Ms., Dr.) and check spelling of their name.
-
Specify “Re:” line with the loan application number for easy reference.
-
Use a polite, enthusiastic tone to convey the good news.
-
Proofread carefully to avoid errors that could reflect poorly on your professionalism.
-
Double check accuracy of all loan details before sending.
-
Format the letter clearly with section headings and bullet points to aid readability.
-
Close with a call to action for next steps and your contact information.
-
Express appreciation for the borrower’s business.
Building Relationships Through Loan Approval Letters
A loan approval letter provides an opportunity to start building a positive lending relationship with the borrower. Some tips:
-
Personalize the letter by referring to prior conversations or meetings you had with the applicant. This shows you remember small details about them.
-
If possible, call the applicant to deliver the news before mailing the formal approval letter. Hearing congratulations directly from you first can make a great impression.
-
Offer yourself as a helpful ongoing resource to answer any questions about the loan or next steps rather than just stating instructions.
-
Provide multiple convenient ways to contact you like phone, email, and office hours.
-
Make sure the approval process goes smoothly so you start the relationship off on the right foot.
Pre-Approval vs Final Loan Approval
It’s important to understand the difference between a pre-approval letter and final loan approval:
-
Pre-approval indicates preliminary conditional approval based on a borrower’s creditworthiness and stated information. It is not a binding commitment or guarantee of an actual loan.
-
Final approval means the loan application has been thoroughly verified and underwritten. The lender commits to providing the loan as outlined barring any major changes in the borrower’s situation before closing.
Make sure your letters clearly communicate at what stage of the lending process the approval applies to avoid confusion.
Writing a well-crafted loan approval letter does not need to be complex. Follow the guidelines and examples here to inform applicants of your loan decisions in a warm yet professional manner. Your letters can go a long way toward starting new client relationships off on the right foot as you help finance their dreams.
Issue loan approval letter to your employees professionally and effectively.
A loan approval letter is issued to an employee who avails of Company loan for personal use. The letter defines the policy, terms & conditions of availing such loans. It will mention the tenure of repayment and how the repayment of such loan from the employee should happen.
This letter template is available for download in Word format.
With this Loan Approval Letter template you can:
- Communicate precisely to employee
- Accurately record the transaction
- Record agreement of both parties
- Ensure all points are covered
In just a few minutes you will be able to create loan approval letters for your employees. This template covers vital information like:
- Loan reference number
- Date of loan sanction & payment to employee
- Interest on loan, if any
- Number of installments and monthly amount
- Mode of repayment
Download for Free
How To Understand Your Pre-Approval Letter
FAQ
How do you write a loan approval letter?
What is the notice of loan approval?
How do I recommend loan approval?
What is a loan approval letter?
Banks keep on receiving numerous loan applications. Informing the applicant about the loan approval falls under the duties of a bank manager. Well, here is a sample to make your job easier. It is a brief, formal, informative letter which informs the applicant about the approval of his loan application in a simple manner.
How to inform the applicant about loan approval?
Informing the applicant about the loan approval falls under the duties of a bank manager. Well, here is a sample to make your job easier. It is a brief, formal, informative letter which informs the applicant about the approval of his loan application in a simple manner. Write such a letter on behalf of the bank in a short and sweet manner.
What is a mortgage pre-approval letter?
A mortgage pre-approval letter is a document from a lender confirming their willingness to lend you a specified maximum amount of money. A pre-approval letter impresses sellers and real estate agents because it shows you’re a serious buyer with the financial ability to move forward with a purchase. What’s the benefit of a pre-approval letter?
What do approval letters mean?
Approval letters simply mean that something (loan, mortgage, sick leave, etc.) has been approved. There are many reasons for which approval letters may be written. Some of the common ones include giving permission at work, to approve a loan or finances, and to approve or endorse a construction project, just to mention a few.