Obtaining an unsecured personal loan requires a better credit history than other types of loans. Still, there are programs that may be available to you with less than perfect credit. It comes down to how much you are looking to borrow, what interest rate you are willing to pay and other basic underwriting (loan review at a lender) criteria. If you been late with payments and have a lot of debt, you may want to review the debt consolidation without loans section of this page and the separate debt consolidation directory page, as well.
A personal loan is generally made for smaller amounts and is most often offered on an unsecured basis. This means the borrower is not required to present collateral / security in order to obtain financing. The approval of unsecured loans is typically based upon the borrower’s credit history and ability to make payments, as determined by such factors as job stability and debt to income ratio (monthly payments as a percentage of gross income). Other factors, such as length of time at your residence and whether you own a home or not may play a part, as well. These two factors are indicators of stability. Because they only require you to sign and not give collateral, they are also often referred to as signature loans. The loan is guaranteed with your signature. This may sound great, but because of their increased risk to the lender, they are most often financed at higher interest rates than other types of loans. In some cases, these loans are secured to assets, such as a vehicle (car title loan), but this form of financing is not nearly as common as it once was.
Personal Loan Providers
Have good to excellent credit? Consolidate your debt with a loan.
Expand and learn more about basic borrower requirements at Lending Club (Not available in all states).
Consolidation Without Loans
Have you had credit problems, bad credit, or already been turned down for a loan? Review the subsequent loan alternatives for a better fit to your unique financial circumstances.
Additional Personal Loan Information
Unsecured lending takes a couple of main forms, based upon the borrower’s needs: traditional personal loan financing and credit cards. While traditional personal loans have been around much longer, they have been largely replaced by the credit card, which lenders find far easier to sell, package and market to the public (thereby making them much more lucrative… and dangerous for irresponsible users). You can now find a credit card for almost any need: retail / store, gas, pre-paid, secured, and incentive cards (examples: frequent flyer miles and cash back programs).
Personal or signature loan financing is not as prevalent as it once was due to the fact that it has a sales cost to the financial institution or lender and is more difficult to package using computerized underwriting programs. However, this directory does feature several advertisers that offer this type of financing, or you can apply for one at a bank (visit the bank directory for listings of local banks). A few key things to note: 1) These loans are generally paid out in a single lump sum; 2) They usually have a fixed monthly payment, term and interest rate (unlike a credit card); 3) And finally, as mentioned, they are charged at a higher rate of interest than the common forms of secured loans, such as mortgages, home equity loans and automobile loans.
Borrowing and using a personal loan for debt consolidation will do absolutely no good if you think the resulting lower payments will give you the right to go out and run back up your debts by shopping. If you do, you will only become worse off than you are now. Here is a better idea: Open a savings account and put a portion of your check into it each payday. Many banks also offer auto-withdrawal services and are more than willing to do this for you. If you cannot force yourself into a schedule of saving on a regular basis, let them help you. Then, when an emergency arises, or that "gotta have it" purchase comes along, stow the charge card. Use your savings!