How to Get Private Personal Loans

Private personal loans can be difficult to secure because personal loans have a high level of default. Most personal loans are not secured with an asset. This means the lender has no collateral to seize in the case that a buyer cannot repay the debt. The buyer, then, can walk away relatively unharmed without repaying the debt. Since these loans are risky for lenders, you will need to enhance your application if you wish to secure a private personal loan.

Research Personal Loan Lenders

The first step is to learn about the lenders in your area offering personal loans. Many banks offer personal loans, but they tend to give priority to their own customers. If you do your banking at a location offering personal loans, request information on their personal loan options. You will likely find these loans tend to be low-limit, and the limits may be based on the total cash you have in the bank. This can be risky if the bank wants to place a lien on your account until the loan is repaid. If you do not want to work with a bank, research independent lenders in your area. Online lenders are always a potential resource, but it is more challenging to negotiate with online lenders. 

Research Loan Structures

You should look into the different loan structures available for personal loans. For example, you may find you are able to collateralize an asset such as your car to receive a very high limit loan. This makes the loan riskier to you, but the risk can be well worth the added savings. Secured loans tend to have much lower interest rates. Opt for an unsecured personal loan only if you are uncertain of your ability to repay the debt. This high-risk loan structure is very costly, and it is often considered to be an "emergency" loan option.

Apply for a Loan

When you apply for a personal loan, you will be asked to provide verification of your identity and your income. Very few lenders will offer "no doc" or "low doc" loans. These loans require a low amount of documentation, and you may be able to state your income instead of offering verification through a paycheck. While this may seem convenient, it can actually add to the risk of the loan. Be wary of stated income loans. The lender is essentially agreeing to give you a loan without knowing whether you can afford it. 

Negotiate Loan Terms

Once you have applied for a loan, your lender will underwrite your application to check for accuracy. Then, you will get a loan quote. This quote, if you sign it, becomes your loan contract. However, you do not need to sign the quote right away. You can ask to change the terms so they are more favorable to you. Most lenders expect some loan negotiation. Do not be afraid to ask for lower monthly payments or lower interest rates. This may mean you have to sacrifice terms elsewhere in the loan, but you should always aim to have your priority items taken care of.