When you are looking for a low rate personal loan, one of the determine factors besides your credit may be the purpose of the loan. A personal loan is typically thought of as an unsecured loan, so what you want the loan is going to play an integral part in whether the loan is granted. Finding a lender who will work with you on that basis may take a little research and ingenuity unless your credit is excellent to good.

Why would you need a personal loan

Some of the reasons a person might seek a low rate personal loan is to take a vacation, pay some medical bills, catch up on household bills, make car repairs, or do some holiday shopping. There may be others, but these are the most common reasons for needing a personal loan. Keep in mind that if you have good credit, this will not be a difficult issue unless the lender you seek for a low rate personal loan is not into the habit of loan money on just a signature, but those who have less than perfect credit, the reason for the loan may very well be the determining factor. For instance, he may loan money to someone with fair or poor credit for medical bills or car repairs that are excessive, but he may be less likely to loan money for catching up on bills or buying Christmas gifts since both of these needs show financial irresponsibility.

Qualifying for a personal loan

Since the lender is loaning you money on nothing but your signature, qualifying for a low rate personal loan is going to be more difficult than qualifying for a car loan or a home mortgage. The reason for the difference is that the lender knows he can get his money back with a secured loan by reclaiming the property, but with a personal loan, he does not have that option. Certainly, he has other options that are contingent upon where you live and what is legal where you live, but it’s much easier to reclaim property on which you have a lien from the time of the loan. Because of the increased amount of collection effort required for a personal loan, the rules are more stringent and may include any of the following:

• Good credit

• Job stability

• Experience with the lender

• Justifiable reason for needing the loan

Next to credit, experience with the lender is probably one of the most important factors. Even if you have questionable credit but have had loans with the lender before and paid well, you still probably be approved. Strangely enough, people with poor credit tend to have one creditor they pay on time for that reason. For most people it is their car loan and house payment, but for others it may be one lender so that if they need a loan, they always have a source of funds.