Almost everyone will need a personal loan sometime in their life whether it be for wedding expenses, vacation travels, car purchase, car repairs, home purchase, tuition costs or funeral expenses. When applying for a personal loan, almost all lenders will base their loan decisions on credit. So, if you have limited credit, it could be an obstacle to you obtaining the loan. However, there are options you can take to obtain a personal loan with limited credit.
Lenders will often lend just within their community so they can provide easy accessibility to the office for their customers. You may already know of lenders in your area. Ask your family and friends for lenders they have used and had a good experience with and try those lenders.
Applying for Loan
You need to shop around for the best deal. Rather than driving around town all day, you can call majority of lenders and apply over the phone. You will need your name, address, residence information, employment history and a list of assets. Generally, the lender can pull your credit and give you an idea as to whether or not they can do the loan after applying over the phone. You may also choose to go inside the office and apply, and may even be able to apply online if the lender has a website.
Do I Need Co-signor?
If your credit is limited, you can apply with a co-signor to increase your chances of obtaining a loan. A lender may be more willing to give you a loan if you have a co-signor with a good credit history. However, the interest rate, as well as how much credit you get, will most likely be determined by the qualifications of your co-signor.
If you have no co-signor, you may be able to use collateral to get a personal loan if you have limited credit. Let the lender know during the application, that you have collateral to use. Often, collateral is considered an automobile, land, home or recreational vehicle. The lender can reduce their risk that you will default if the loan is secured with collateral.
No-Cosignor, No Collateral?
If you have no co-signor and no collateral, you may still be able to obtain a personal loan with limited credit. Often, banks or financial services, such as Security Finance, World Acceptance Corporation, Regional Finance and American General Financial Services, can start you with credit with a small loan, usually a few hundred dollars. This will help get your credit established so you can borrow more money in the future.