get a personal loan approved bad creditIn some cases, a personal loan is desirable.

You may want to start a home business, or you may want to borrow for a vacation, or you might have some other use for the money.

A personal loan — usually unsecured — can provide you with a little extra cash to help you meet your goals.

Actually securing that personal loan can be a bit difficult, though.

Here’s a few ways on how to get your pers0nal loan approved.

And if that doesn’t work, we have offer some other options, too.

Qualifying for a Personal Loan Through Your Bank or Credit Union

It’s becoming increasing difficult to qualify for a personal loan through your bank or credit union, especially if you want a larger amount.

If you are a good customer, and have good credit, you can usually get what is called a signature loan for $3,000 to $5,000. Check with your bank or credit union to find out whether they offer these loans, and what the application process is.

If you want a bigger loan, though, you will need to jump through some hoops. You will need to fill out a loan application, and you might even need to designate collateral. (Collateral is something of value that can be taken from you and sold to pay off the loan if you can’t pay it back.)

You will need to have a relatively high credit score (above 700 if you want to even be considered for an unsecured personal loan), and you likely not be approved for as much as you would like. (Not sure how your credit looks? Use services from Credit Sesame, Equifax, and TrueCredit to figure that out first.)

However, the interest rate on a personal loan at a bank that values you as a customer is usually quite low compared to the alternatives.

Services that Help You Compare Loans

banner for personal loan rates at GoBankingRates.comThere are several places you can get rates for personal loans.  The easiest one I have seen to use is  They have you fill out a form that asks if you are employed, how much you want to borrow, and what your credit rating is.  Once you hit submit the system will match you up with a lender that will get you the best rates on your loan.

This allows you to cut through the salesmanship that you might get through a local bank and go directly through the lender.  I even went through the process of calling the recommended lender from GoBankingRates and they were very knowledgeable.  Overall if you need a personal loan this looks to be a really good way to go.

Other Options for Personal Loans

There are other options for personal loans, beyond your bank or credit union. Some of your other options include:

Credit Cards:

Many of us don’t think of credit cards as loans, but, in reality, your credit card constitutes a personal loan. If you have good credit, and you are hoping for a larger limit, you can apply for a new credit card. You can boost your available credit, and then draw on that for your personal use. However, credit cards usually have relatively high interest rates, and if you carry a balance, you could wind up paying quite a bit. Try to get a new card with an introductory period, and you will have an interest-free personal loan.

Here are some of the best credit cards you can get with a 0% introductory rate for either purchases or balance transfers:

Capital One® Cash Rewards

  • 0% introductory APR on purchases and balance transfers through November 2013
  • 1% cash back on all purchases
  • 50% bonus cash back on what you earn each year
  • $100 bonus after you spend $500 in the first 3 months

Discover More

Did you know you can open a business credit card account without owning a substantial business? You can apply under a new “self-proprietorship” that you are running.

Capital One® Spark Miles for Business

  • 0% APR on purchases until May 2013
  • 1 mile per dollar spent on the card
  • 50% bonus on the miles you earn every year

Capital One® Spark Cash for Business

Peer to Peer (P2P) Lending:

One of the increasingly popular options right now is P2P lending. Whether you are financing a business, paying for college, or trying to buy a motorcycle, P2P lending can help. You will have to apply for the loan, and your credit will be checked.

Additionally, if you want to draw funding sources, you will need a plan, showing how you will use the money. P2P lending offers competitive interest rates, and a good story can help you get the funding you need.

Interested in learning more? Check out Lending Club and Prosper. Both are leaders in the P2P lending space with solid processes for loan origination, repayment, and tracking.
I did a big comparison of the two sites in my Prosper vs. Lending Club Experiment.  Now I was investing in other people’s loans, but you can get a real feel of how peer to peer lending works and if it is a good option for you.

Family and Friends:

If you have family members or friends who can help you out with the personal loan you need, you can often get the best loan terms.

However, you want to make sure that you are sure that you can repay the loan; you don’t want to risk your relationship. Have a contract so that you are accountable, and so that your friend or relative knows that you are serious.

Editor’s note:  Personally, I’m totally against borrowing from family or friends.  In my own family, money led to a huge falling out between family members.  It shouldn’t have, but it did.

Final Thoughts on Personal Loans

If you are looking for a personal loan, there are a number of options. From payday lenders (which you should avoid as much as you can) to credit cards to friends and family to random strangers via P2P lending, chances are that you can find a personal loan. But, depending on your situation, you might have to pay a lot for it.

Whichever path to a personal loan you select, make sure you track your finances well using a budgeting tool like Mint or Manilla. You don’t want to have to take a personal loan out during a pinch and end up paying thousands in interest and late fees from mismanaging your money.


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Comments | 3 Responses

  1. NayNay says

    Not entirely true, Jeff. I work for a Credit Union and can tell you that we lend to people whose FICO scores are in the 600’s all the time. It is not limited to 700+. Sometimes special exceptions are made for emergencies (death in family, etc) and that is something that Big Banks will never do. Our rates depend on the score and our signature loans start at $300 and go up to thousands. Yes, we like to use vehicles (etc) as collateral with higher amounts, in order to minimize our risk, but that’s not always necessary. We offer amazing credit card rates with high limits for those who qualify (FICO over 640 and income over $30,000), but we pride ourselves on consumer education, and constantly refer members to our budgeting and debt management website to learn how to use their new tools wisely. Again, this is something that separates us from the Big Banks! :-)

  2. Richard says

    The problem with getting a loan with bad credit is that you’ve already shown you cannot repay the loan. There is a difference between wants and needs and usually those with bad credit have gotten into problems by having too many wants. Think about all of the bad money mistakes you’ve made. We’ve all done it that dinner out or that pair of jeans on sale. One transaction at a time has caused us to go over our credit limits and just one setback caused a late payment. Before you know it, you are taking loans to repay loans. The lenders know your personality type based on your credit score. What makes you or them think otherwise about your future if your past shows impulse? I don’t blame you for not wanting a cash advance but those are the kinds of companies willing to take risks because they charge such high interest. Your best bet is to increase income and/or reduce expenses. Do you NEED a loan or simply want one to bail out of mistakes you’ve already made? Think about a part time job, getting rid of some services you really don’t need, and developing and sticking to a financial plan that will give you the power to be a lender instead of a borrower. Don’t compound your bad credit with bad choices.

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