How to Obtain a Personal Loan
If you need cash quickly, you may want to consider taking out a personal loan. From medical expenses to vacations, once you receive a personal loan, you are free to use the money for any purpose you desire. Getting a personal loan is easier if you have the right information on hand.
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Instructions
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Order a copy of your credit report. There are three major credit reporting agencies -- Equifax, Experian and TransUnion. Since they all report different information, you should order a copy from each agency.
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Consider spending a few extra dollars to obtain your credit score. Once you know your exact score, you can set realistic expectations regarding your interest rate.
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Improve your credit before applying for a loan if your score is below 500. Most lenders will not approve you for any type of loan if your score is this low.
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Make sure you know how your score will affect your interest rate. For scores between 500 and 600, you can expect to pay an 11 to 12 percent interest rate. If your score ranges from 601 to 675, your rate will probably range from 7 to 10 percent. And, for those with a score above 675, the interest rate will likely be no more than 6 percent.
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Apply for a personal loan. See below resources for potential lenders. Keep in mind that, in order to complete your application, you will need to provide proof of employment and income (such as pay stubs). In addition, you will need to provide your social security number, picture ID and bank account information.
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Consider a co-signer. If you are denied a personal loan or given an unsatisfactory interest rate, you may want to ask someone (usually a family member) to cosign on the loan for you. Keep in mind that, in order to receive any benefits from a cosigner, the person should have excellent credit (a score of 750 or above).
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Tips & Warnings
If your credit score is above 675, your primary bank is probably the best choice for a lender.
You should reconsider taking out a personal loan if you will be using the money to pay off other debts. To prevent future problems, you may want to contact a debt counseling program instead. Avoid "Pay Day" loans. Although these companies target their services to those with less than perfect credit, they charge an exorbitant rate of interest and are therefore never a good choice.
Resources
- Photo Credit Paul Paladi
