How to Get an Unsecured Personal Loan

An unsecured personal loan is a loan for which the lending financial institution does not demand that the borrower offer up any collateral. While you should be able to get a decent rate on an unsecured personal loan if you have a solid credit rating, interest rates are usually much higher than what you'll find with a secured personal loan.

Difficulty: Moderate

Instructions

Things You'll Need:

• Proof of monthly income

Get an Unsecured Personal Loan

1. Collect your pay stubs or monthly earnings statements, dating back at least 6 months and up to 1 year.

2. Approach your regular bank or financial institution first to see if it offers unsecured personal loans as part of its lending program. You're more likely to get good loan terms from a bank where you're already a customer.

3. Demonstrate that your income is stable when you go to meet with the lender. If you're borrowing from an online or non-traditional institution and you won't have a face-to-face meeting, ask your employer for a letter confirming your salary and job security.

4. Shop around first to see what kind of terms are available through the various lenders. You can use this information as a bargaining chip when dealing with a particular institution to try to get a better rate.

5. Negotiate the terms of the loan, particularly the interest rate. The lender is likely to make an initial loan offer with an inflated interest rate. Some financial institutions may permit you to negotiate the interest rate down, particularly if you have a good credit history.

6. Remember that an unsecured personal loan should always come with a fixed interest rate and a fixed monthly payment.

7. Double-check the loan documents to make absolutely certain that they lay out the terms and conditions of the loans as discussed with the lender. Walk away from any lender that tries to fudge paperwork after you've reached a verbal agreement on the loan terms.

8. Receive the entire amount of the loan in a single up-front payment. An unsecured personal loan is designed to give you quick cash when you need it.

Tips & Warnings

• If you get a loan through your bank, you might qualify for a percentage discount off your interest rate if you arrange to make automatic monthly payments out of your regular bank account. Ask your lender if they offer such a discount.
• Unsecured personal loans frequently include an "origination fee." It will vary from lender to lender and loan to loan, but you should always factor the origination fee into your price comparisons when shopping for a loan.