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5 News Stories to Read Before Applying for a Personal Loan

[Apr 9, 2009.]

 

An unsecured personal loan is not an easy thing to obtain these days. In this tough credit environment, education is key. Knowledge truly is power.

Read these five news stories to gain perspective on trends and ideas that may improve a borrower's chance of qualifying for a personal loan:

1. "Markets for the Poor In Mexico"

It may seem that a story about Mexico has nothing to do with applying for a personal loan in the U.S., but that is definitely not the case. So-called "microloans," often given to low income entrepreneurs, have taken root south of the border and have proven extremely profitable for lenders.

Best believe that American lenders have taken note of these profits, and so should individuals seeking to obtain an unsecured personal loan. Especially for self-employed people with income that is less than completely verifiable, familiarity with the microloan phenomenon is a must.

2. "Ten Things to Remember When Getting a Personal Loan"

Rebuild's own Francine Huff offers concrete, no nonsense reminders that unsecured personal loans are not necessarily easy to qualify for, but can be had under the right circumstances. Personal loan candidates who do what they can--before applying--to make their application a strong one are in a good position to be approved for an unsecured personal loan.

These actions can include taking measures to bump up a sagging credit score, or soliciting a letter of recommendation from a long-time employer.

3. "Prosper Launches Social Lending"

This news story is not really news, in fact it's rather old, but it's also instructive. Tech Crunch's Michael Arrington gives readers a good idea of what "social lending" is all about. Basically, it's about people lending to each other, over the Internet. A company called Prosper.com is the early leader here.

This practice hasn't gone mainstream yet, but shows promise. The practices of Prosper.com are definitely worth a look for people who have been turned down for unsecured personal loans elsewhere.

4. "Extreme Measures"

This article by Veronica Dagher speaks about ways to reduce and control recurring expenses. Doing so is probably the best way to increase the chances of an unsecured personal loan being a possibility.

When lenders check credit reports and evaluate monthly bank statements, they look for expenses that are not going away, such as car payments, school tuition, and mortgages. If too much expenses are going out relative to income from the job, an unsecured personal loan, while it may be needed by the borrower, doesn't make much sense from the lender perspective.

Cut expenses before applying for a personal loan and approval becomes more feasible. Lenders want to see that personal loan repayment fits into that monthly budget.

5. "How to Use a Personal Loan Wisely"

At the risk of being self-referential, this story may be useful in assisting personal loan applicants to think about why they need this money, rather than simply focusing on the fact that money is needed. The purpose of a personal loan, after all, is what really matters, not the mere acquisition of funds.

Taking out a personal loan for a good reason--such as a tax bill, school expenses, or housing--is worth working for until the loan is paid off, and won't be a regretted decision. A worthy purpose may also help in convincing a lender to make an unsecured personal loan.

Most people, even bankers, want to do good.

 

About Author:

Andrew Freiburghouse is a writer and businessman. He has worked as a magazine reporter, tax preparer, screenwriter, copywriter, and loan officer. He graduated from Santa Clara University in 1999 with a B.A. in English. Andrew was born and raised in the City of Los Angeles.

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