Compare and search for a personal loan

Because personal loans do not usually require collateral for approval, these loans are unsecured. This means that instead of having collateral in place, the loan relies on the agreement to repay the debt based on the consumer’s credit history.

However, there are times when a personal loan can be a secure loan, being that collateral is either used or required for the loan's approval. Often, secured personal loans are used when the consumer wants lower interest or does not have the financial history for unsecured approval. In these situations, the item or account that’s used as collateral can be taken by the lending partner if the borrower fails to satisfy the terms of the loan.

To determine whether a consumer qualifies for a personal loan, a lending partner might look at the consumers’s credit score and income records. They then weigh these records against other debts that the consumer handles. This is referred to as the consumers’s debt-to-income ratio (or DTR).

Along with determining a consumer's eligibility, credit scores and other debts determine creditworthiness. This will impact the type of loan they’re suitable for, the length of the term, and the interest rate attached to the loan. The lower the credit score, the higher the interest rate is.

When looking for a lending company, it’s a good idea for consumers to research several lending companies before choosing. Different companies may offer different rates. Depending on whether the lending company is offering promotions, consumers may save money or get better rates.

While some lending companies may deny a consumer, another company may approve the application. This is because their protocols differ from other companies.

Shopping around for the best rates can help a consumer gain approval, even if they’ve been rejected previously.