Where to Apply for a Personal Loan
Personal loans are often an easy way to obtain cash quickly. Whether you need cash for home improvements, a vacation, bills or pretty much any other reason, a personal loan allows you to use the money you receive for whatever you choose, for a price.
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Instructions
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Get a copy of your credit report from all three credit reporting agencies--Equifax, Experian and TransUnion. You may also want to pay the extra few dollars to receive your credit score, since that helps determine the interest rate of your loan.
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Work on improving your credit before seeking out a personal loan if your credit score is below 500. With that score, you will probably be unable to find a lender.
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Understand that you are considered a high-risk borrower if your credit score is between 500 and 600. This means your interest rate will be higher than the national average. Typically, you can expect a rate of 11 to 12 percent. Also, the amount for which you are approved may be substantially less than what those with higher credit scores would be given.
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Know that you are a moderate-risk borrower if you have a credit score of 601 to 675. If you fall into this category, you will most likely find a lender easily. Your interest rate can be from 6 to 10 percent, however.
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Expect to pay anywhere 5 to 6 percent if your score is above 675. That score makes you an average- to low-risk borrower, and will have no problems finding a lender.
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Secure a personal loan through a lender that caters to those with bad credit, if necessary. See Resources below for more information.
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Tips & Warnings
To receive the best interest rate for your personal loan, apply with more than one lender.
Some sites connect borrowers with multiple lenders, so you can submit one simple application and view several loan options (see Resources for examples).
If you have "good credit" (a score above 675), apply for a loan with your primary bank first, since banks often offer deals to current customers.
If you're taking out a loan to pay off other debts, you should probably reconsider. A debt counseling program will most likely be more beneficial to you.
Resources
- Photo Credit Dani Simmonds
