How to Get a Personal Bank Loan

A personal bank loan generally takes one of two forms: unsecured and secured. An unsecured personal bank loan is given without collateral at a higher interest rate, and a secured bank loan uses collateral to get better repayment terms, lowered fees and a more advantageous interest rate.

Things You'll Need

• Good credit
• Loan application
• Supporting documentation, such as proof of monthly income
• Collateral (needed for a secured loan)

Instructions

Borrow Money Through a Personal Bank Loan

1. Assess your current financial situation by listing your assets, detailing your monthly income and deducting any liabilities, debts or expenses.

2. Ask your employer for a letter confirming your monthly income and job security, and back it up with pay stubs or, if your salary is deposited directly into your bank account, invoice statements.

3. Do some shopping. You may or may not qualify to get a personal loan through your regular bank. If you don't, there are dozens of lenders out there who specialize in personal loans.

4. Compare not only interest rates, but also repayment terms. Find out if your monthly loan payment is fixed or variable, and opt for a fixed term whenever possible. Ask about any up-front fees, and make sure you know whether the loan is disbursed all at once or in installments.

5. Offer collateral to get a lower interest rate. Even if you have excellent credit, an unsecured personal loan will always come at a higher interest rate than a secured one.

6. Complete all application materials in full, including supporting documentation listing your assets, liabilities and income.

7. Check over the loan documents once they're prepared. The terms you and the lender agreed to should be represented honestly and in good faith in the loan documents. You can sign off on the loan if all items appear as discussed with the lender.

8. Repay the loan according to the terms outlined in your agreement. If you default, you risk losing the collateral you offered up to secure your loan. If you have an unsecured loan, failure to make payments will have a profoundly negative impact on your credit rating.

Tips & Warnings

• If you've been a customer at the same bank for a long time, start your search for a personal loan there. Your continued business should result in a competitive interest rate and convenient loan repayment terms.

• Read the fine print on the loan documents very carefully for hidden fees and charges.

• If a lender changes the terms and conditions on the documents after you've reached an oral agreement, take your business somewhere else.