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How to Apply for a Personal Loan

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How To Apply for a Personal Loan

If you’re considering applying for a personal loan but don’t know where to start, we have some tips for you. You’ll first want to see what you might qualify for by reviewing your credit and researching your options based on where your credit stands. From there you’ll need to get together the necessary paperwork and apply for that loan.

Yes, it’s pretty much that simple — it’s even possible to be approved for a loan in less than 24 hours if you’re applying for a loan online — but there’s always a lot to consider when applying for a loan, particularly when you’re doing it online. That’s because there are some fraudsters who set up fake loan sites, so be sure to share your personal information only with lenders that you know for certain are reputable. You don’t want to become a victim of identity theft.

When Should I Consider a Personal Loan?

Personal loans are typically sought after if there is a big purchase that needs to be made or there is an emergency, and some unexpected expenses arise. If any of this is the case, then you are probably in dire need of cash very quickly.

A personal loan is a type of credit offering that is given to a consumer for a variety of different reasons; some of which we have already mentioned. They are usually not considered for a more specific purpose such as buying a home or car.

Personal loans are installment loans which means if you are approved by the lender, you will receive a lump sum of cash that you will need to repay in a certain amount of time as dictated by the lender.

Personal loans are often unsecured, so you will most likely find much higher interest rates than you would if you were seeking a secured loan. But, you will also hopefully find rates that are much lower than if you were to use your credit cards instead.

Because personal loans are not secured, they may require a much higher credit score for approval. If you find that your credit scores may be lacking, you will want to consider other financing options that may be available to you.

A few scenarios indicative of choosing a personal loan could be any of the following:

  • A home improvement project
  • Financing for a business purchase
  • A much-needed vacation or getaway
  • Payment for a medical procedure
  • Financing for a wedding or other big event
  • Appliance purchase
  • Debt consolidation

Personal Loan for Debt Consolidation

One of the most common reasons people choose a personal loan is for debt consolidation. However, unless you have a concrete repayment plan in place that is manageable, you may want to reconsider a personal loan and instead look into peer-to-peer financing.

A personal loan is a viable solution for debt consolidation if you have significant debt, but it is not out of control. When used for a moderate amount of debt, a personal loan for debt consolidation makes sense and may save you some money when it comes to interest.

However, you will want to make sure that your spending remains under control so that the debt goes away instead of grows because you suddenly have access to a lump sum of funds due to the personal loan. Make sure to use the personal loan as intended and make the payments on time.

Personal Loan Versus Peer-to-Peer Lending

Peer-to-peer lending (P2P lending) is when money is borrowed from a business through an online service that matches lenders with borrowers. The loan given by the lender is not secure and is not protected by any government guarantee which makes it a higher financial risk for the lender.

An advantage of peer-to-peer lending may be lower interest rates than you would typically see with a traditional bank. The application process also takes a few minutes, so it is a lot easier to shop around to find the best loan opportunity with the best available interest rates.

Step 1: Check Your Credit

As you begin the unsecured personal loan process, you’re going to want to check your credit and credit history. That’s because, whether or not you qualify for a personal loan will depend upon your creditworthiness. The interest rate you will be charged also will rely on where your credit stands.

You can start reviewing your credit by checking your credit score. You can get a free credit score at And if you haven’t checked your credit reports lately, you can request free copies of your credit reports from the three major credit bureaus through Review the content of your reports carefully and correct errors before shopping for a loan.

Step 2: Research Before You Apply

Every time you apply for a personal loan, it triggers an inquiry into your credit, and this nudges down your credit score a little bit. It’s a promising idea be selective and apply only for loans that you actually qualify for.

You can ask lenders in advance about the minimum credit score that they require for personal loans. Some lenders will even list this information on their websites.

Step 3: Get Everything You Need for the Loan Application

In addition to checking your credit score, a potential lender will want to ascertain your annual income as well as your debt-to-income ratio.

Other details you are likely to have to share on a loan application include your monthly housing payment, whether you rent or own your primary residence, the name of your employer and how long you’ve worked there.

Having this information at the ready can help to speed up the process of applying for a personal loan, whether in person or online.

Step 4: Start Local

A good place to begin your search for a personal loan is with your local bank or credit union. It’s a good idea to research the credit criteria required for personal loans before you apply. Check your bank or credit union’s website or call their customer service. You may even want to make an appointment with a loan officer to discuss options.

Applying for a loan with an online lender is also an option. You can research loan options on at your convenience, 24 hours a day.

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  • Alex

    I would like to get a personal loan for about 15,000, pay off cc debt, consolidate everything but I want a fixed rate of interest and I want to pay $200 dollars a month until paid off. How do I go about finding that sort of loan?

    • Gerri Detweiler

      Most unsecured consolidation loans are for 5 years or less. So $200 a month is a probably low as a monthly payment for that loan amount, unless you get a home equity loan (which may be for 10 years or longer). At 12% interest, for example, your payment on a 5 year loan for $15,000 would be about $335 a month.

      If that’s still doable, you can
      search for an online personal loan for debt consolidation at Whether or not you can qualify will depend on your credit scores and your income.

  • Mike

    I want to apply for a loan. My bank told me they will check the last 2 paychecks before allowing me a loan. However on my latest paycheck I missed 2 days of unpaid work. The amount will be therefore about 100 less. Will they still consider loaning me coz my raw income will still be above their minimal standards even with my amputated paycheck.

    • Gerri Detweiler

      It really depends on whether you can qualify at the lower income amount. I’d suggest you ask the lender.

  • Annie

    A few days ago I applied online for a credit card consolidation loan. I used my maiden name and the interest rate that was offered was very high. 2 days later I reapplied to the same company, using my married last name and the interest rate offered was considerably less (less than half). Why does that matter? This was a highly rated company.

    • Gerri Detweiler

      Whether or not you are married shouldn’t matter. It’s illegal to discriminate on the basis of marital status. Is it possible they couldn’t access your full credit history with your maiden name? Did you provide your SSN and full details needed to access your credit information?

  • Jean Erwin Gailey

    I had to retire earlier than I had planned and still owe more than I wanted to when I retired. What I want to do is combine most of this debt, pay it off, and make one larger payment to a loan company to get it paid quicker. When I combine everything I pay to each one of them I would have no problem making the larger payment, but am having trouble finding someone to give me a loan. My credit rating is good 759+. Why am I having such a problem?
    I do have a personal loan already that will be paid off in just over a year, but that is included in the figures I added together when trying to figure what I could pay.. Thanks for your help.

    • Gerri Detweiler

      Why are you being turned down? The rejection letters should state the main reasons. What are they saying? Is your income lower now that you are retired?

      • Jean Erwin Gailey

        The only thing I can get is that my credit score is not high enough to get a loan from them. Cannot get to the letter I was supposed to get giving details of rejection and believe me I have tried. Score is 759 to 781. Income is lower than take home pay I had, but manageable to pay back loan I need.

        • Gerri Detweiler

          If you didn’t get the letter listing the reasons for the decline that may be a violation of federal law. (But if you got a letter disclosing your credit score, the reasons should be listed in that letter…) If you didn’t get a complete adverse action letter you can file a complaint with the Consumer Financial Protection Bureau.

          Beyond that it’s really hard for me to say because I don’t know why they turned you down. Have you tried a P2P lender like Lending Club or Debt consolidation is one of the most popular uses for those loans. Learn more here: debt consolidation loans.

          • Jean Erwin Gailey

            The applications was with Prosper – everytime I tried to get to the letter, it was like another application form. All I ever got was that I needed to verify my email address which I did each time and each time it went back to the same thing. I give up with this bunch! I will try another option. Thanks for your help.

          • Gerri Detweiler

            Jean – I am emailing you…

          • Gerri Detweiler

            Jean – I just emailed you.

  • Pi Ka Chu

    I’d like to get a credit card but are there any that don’t require putting money into before receiving funds on the card? Say, for example depositing 50 dollars and the card being 200 dollars in return. Are there any that don’t require depositing 50 dollars? I’m currently unemployed and looking and I need financial help. I got hired at a taco shop but it doesn’t open until September 17th and I know it’s gonna be at least 2 weeks before my first check. I’m 21 and my credit score is 635.

    • Gerri Detweiler

      I doubt it’s going to be possible for you to get an unsecured card without income. You can try but your score isn’t very high and the combination of the two factors is going to make it difficult.

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