How to Qualify for a Personal Loan at a Lending Institution
It used to be, when you needed a loan you went down the street and talked to a friendly banker, and it was a done deal. Now, with lenders tightening their belts, and banks skittish about taking on customers with little or no payment history, getting a personal loan is no easy task.
How to Approach a Bank for a Personal Loan:
Start with a local lender. The bank down the street is still your best bet. A lending institution in your own neighborhood is more likely to lend you the cash. Your chances are much better is you have a history with the bank. If there is a teller you always deal with, talk with him/her first. If that person knows you, even only as a familiar face, he might put in a good word with the manager.
Plead your case matter-of-factly. If the reason you need a loan is for medical expenses, you don’t need to go into a lengthy dialogue as to the nature of your impending surgery. A simple statement, "This is for elective surgery," will suffice. Be professional and courteous. Point out your long-standing history with the bank, and a stellar employment record wouldn’t hurt either.
Negotiate the interest rate. Do some research first. Find out the prime rate before you walk in the door. So even if you are offered a loan, make sure the APR will make it worthwhile. If the bank is only offering a rate of 18 percent, go somewhere else. You can even find a credit card that offers a better rate than that.
Consider a second mortgage. If you own your own home, a home equity loan or line-of-credit may be your best option. But try for an unsecured personal loan first. Remember, if you fail to pay a second mortgage or HELOC, you could lose your home.
Find out about loan processing fees upfront. Many lenders will charge you "points." One point is usually equal to one percent of the loan amount. So, if you’re planning to consolidate credit card debt, keep in mind the processing fees before you sign the paper work. You may be better off finding another credit card with a low introductory rate. Just pay attention to balance transfer fees.
Finally, ask yourself if you really need the loan. Is this something you could save up for? Or if you’re trying to lower your credit card bills, could you contact the card issuer and try to negotiate a lower rate? Chances are, you may not need this loan as badly as you think you do.