When you need to borrow money without collateral, the loan you are going for is variously called a personal loan, unsecured loan or signature loan. It amounts to a lender trusting that you will pay the money back on time, with interest. Such loans usually have higher interest rates than mortgages or loans secured with some property and lower limits on how much you can borrow because the lender is assuming more risk. Unsecured loans are common in small businesses for operating expenses, but you can get one for some temporary expense, such a medical bill.
Do a Little Research
Check your credit score at myFICO.com and make sure it is at least 720. Build it up by paying down credit card bills and any other loans and keep all payments current; payment history and total debt account for about 65 percent of your credit score.
Make a list of all your current loans or debts, such as mortgages or credit cards. Assemble records showing your bank accounts, especially any savings, and other assets, such as cars, that are paid in full. Get pay records for the past several months and, for a large loan, some proof of continued employment.
Contact Your Financial Institution
Apply to your current financial institution for a personal loan. Provide all the requested information and specify how much you need, what the purpose is and the length of loan you need. Provide proof of potential resources if you just want a short-term loan until you collect a debt or fee or qualify for a refund.
Explain how much you can afford to pay monthly or when you would expect to pay the loan in full if you expect some money to come in. Check payment options; some personal loans require monthly payments, others accept only interest monthly with a full payoff at some specified time.
Pursue Other Options
Get a co-signer — a parent, family member or some close friend or business associate — who will guarantee the loan for you. Provide documentation showing your relationship and the financial resources of the co-signer to assure the lender there are resources for collection if needed.
Check other lenders for comparable interest rates and terms or if your lender is reluctant. Avoid small loan or "payday" loan companies, which typically are more willing to make short-term unsecured loans but charge very high interest rates and will be quick to garnish wages or take other legal actions if you do not pay promptly.
Bob Haring has been a news writer and editor for more than 50 years, mostly with the Associated Press and then as executive editor of the Tulsa, Okla. "World." Since retiring he has written freelance stories and a weekly computer security column. Haring holds a Bachelor of Journalism from the University of Missouri.