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I Need a Personal Loan. How Can I Get One?

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personal loan

In an ideal world, we would all have emergency and opportunity funds to cover unexpected expenses. However, there are times when those expenses pop up and you don’t have the cash to fall back on. In these situations, you still have options. Turning to an unsecured personal loan can be one way to alleviate the financial strain you are feeling.

Unlike secured loans, most personal loans are not secured by collateral. Whereas your car loan has the vehicle backing it and your mortgage has a house, an unsecured personal loan is secured only by your earning power and your credit score. Here’s how that works.

What’s an Unsecured Personal Loan?

Most loans are installment loans. This means that you have a set amount that you have to pay back each month until the debt is wiped out. A personal loan is no different, and your installment amount will be based on your interest rate, the amount you borrow, and the length of the loan.

When you apply for an unsecured loan, most lenders will ask for a considerable amount of information. Since there is no collateral, they are taking on a significant risk. Don’t be surprised when they ask for a list of your assets and liabilities, tax information, pay stubs, and Social Security number so they can run a credit check. (Not sure where your credit stands? You can view two of your credit scores for free on

After you go through the application process, either you will be approved or denied for your loan. Being denied is almost always due to one thing: Your credit score is too low. Don’t worry yet! Even with bad credit, there are ways to get an unsecured loan.

How to Get Approved for an Unsecured Personal Loan With Bad Credit

A high credit score is always going to be better when you apply for loans. But scores take time to build or rebuild, and life continues to happen. If you need approval on a loan but can’t wait until you have better credit, here are two ways to do it.

Take a Loan With a Higher Interest Rate

How much you pay for your loan, or your interest rate, is based on your credit score. The lower your credit score, the higher your interest rate will be. The rates will vary by lender and by what the current interest rate environment looks like. The bottom line is that when you have poor credit, your loan can get pretty expensive. For those who would rather not take out a loan with high interest, there is another way.

Unsecured Personal Loans With a Cosigner

When you need to take out a loan, you can piggyback off another person’s credit score when they’re willing to help you get a better interest rate. When you use a cosigner, you don’t have to rely on just your credit alone. Your cosigner’s credit also is taken into account, as is their income. The result is that you are more likely to be approved because the lender is taking on less risk. This is because the cosigner is taking on some of your risk. However, if you default on the loan the lender can go after the cosigner for repayment, so it’s good to realize that your poor management of the loan could be harmful to your cosigner’s credit.

Bridge the Gap With an Unsecured Installment Loan

As you build up your savings, you still have to live your life. When opportunities or expenses come along, you may not want to deplete your savings entirely (if they are big enough to put a dent in those expenses), so an unsecured personal loan could help you bridge the gap.

For those who have poor credit, no credit or a thin credit file, these loans still carry a possibility of paying more, or finding someone that would be willing to cosign with you so that you can get the loan that you need. (You can learn more about the ins and outs of using a cosigner here.) Keep in mind, however, that if you have bad credit, your interest rate may be so high that it doesn’t make any financial sense to take out the loan.

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