Personal loans are a popular choice among borrowers. Balances on unsecured personal loans stand at $177.9 billion.
Interest rates are still low and you can use them for anything, from starting a new business to paying off high-interest debt.
Getting an unsecured loan means that you don’t have to put up collateral to get it. Would you like to learn how to get a personal loan without collateral?
You’re in the right place. Read on to learn how you can get a loan without collateral in this personal loan guide.
Benefits of Getting a Personal Loan Without Collateral
Why should you consider getting a loan without collateral? Lenders are willing to let you borrow up to $50,000 without collateral.
It lowers your risk because you don’t lose anything if the business fails. You’ll have a horrible credit report and collections agencies harass you if you don’t repay the loan. You can still keep your home, car, and other assets.
You’ll pay a higher interest rate with a personal loan that doesn’t require collateral. With interest rates so low these days, it still makes sense to get a loan without collateral.
If you’re starting a business with a personal loan, most lenders want some kind of collateral. They’ll file a UCC lien against your business, which shows up on your credit report.
It alerts other lenders that they have a claim on your business. Should anything change, they’ll file a UCC3 statement. Learn more in this article on UCC3 change statements.
You don’t have to worry about these statements with an unsecured loan.
How to Get a Personal Loan Without Collateral
What does it take to get a personal loan without collateral? Lenders don’t have anything to secure the loan, so they’re going to use your credit score to determine if you qualify for an unsecured loan.
Check your score and get a copy of your credit report. Look for mistakes on your report and get them corrected as soon as possible.
Get your credit utilization rate down to 30% as soon as you can. This raises your credit score and lets you get a better interest rate.
Once you feel comfortable with your score, then look for personal loan lenders. There are online lenders, banks, and credit unions that offer personal loans.
Get prequalified first because this doesn’t impact your credit score. Compare loan rates and terms. You may be able to negotiate the terms of the loan.
Most of all, compare the entire cost of the loan. You’ll pay origination fees and possibly prepayment fees if you pay the loan off early.
Choose one lender and fill out an application. You may have to submit documentation to prove your income with your application. You’ll get approved and get funded in a few days.
Personal Loan Tips
Do you know how to get a personal loan without collateral? You do now, thanks to this personal loan guide. There are many advantages to getting a personal loan without collateral.
Be sure to shop for lenders and improve your credit score so you can get the best personal loan. Visit this blog often for the latest in business.