When you need money, but don’t have collateral, a short-term personal loan is an option. These loans, also referred to as signature loans, are available to borrowers with good credit and steady income. The lack of collateral makes these deals riskier to the lender so expect interest rates to be higher. Because of the potential for greater expense, vet lenders thoroughly before submitting an application. You want to get the best deal without leaving a negative impact on your credit or finances.
Contact your primary financial institution and inquire if they offer short-term unsecured loans. Your existing relationship with the bank can enhance your odds of getting approved.Step 2
Inquire about rates available for short term loans. Many lenders won’t quote an exact rate without an application. If that’s the case, ask for a general range. You don’t want to apply until you choose a lender because you don’t want multiple inquiries impacting your credit score and potentially raising red flags with other lenders.Step 3
Contact other lenders in your areas and review the products available. Choose a lender that has the best rate and short-term product to suit your needs.Step 4
Fill out an application at the lender of your choice. Make sure to fill out the application completely and accurately, as this is the information that will be used to approve or deny the loan.Step 5
Sign an authorization to allow the lender to run your credit report. Credit score is a significant factor in getting a short-term unsecured loan. If your credit score is less than 700, you will start to see a significant increase in your rate. If your score is less than 660, you will likely be denied.Step 6
Submit proof of income and employment. The lender will review your monthly income along with the debt in your credit report and the new payment to determine if you can handle the obligation. Acceptable debt ratios vary by lender, but without collateral, you will need a strong debt-to-income ratio to qualify.Step 7
Set an appointment to meet with the lender and sign the documents. Once you’ve executed all the loan documents, the lender will disburse the money and you will begin the repayment process.
Carl Carabelli has been writing in various capacities for more than 15 years. He has utilized his creative writing skills to enhance his other ventures such as financial analysis, copywriting and contributing various articles and opinion pieces. Carabelli earned a bachelor's degree in communications from Seton Hall and has worked in banking, notably commercial lending, since 2001.