If you have a better option -- home equity, a credit
card, 401(k) loan, a rich relative -- think twice before borrowing
without collateral. But if you have no other way to go -- or are
hell-bent on it -- take these tips.
Do your homework. Go to bankrate.com's (tm) current
loan rate survey and find the best interest rates in your
area or call up a handful of local banks and compare prices.
Ask if the interest rate is fixed or variable and
what the rate cap is. Also inquire about annual fees.
If you belong to a credit union, forget tips 1
and 2 and just go there. Interest rates on unsecured loans can
run about as much as one or two percentage points lower than major
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If you do business with a community bank, take advantage of the
human factor. Being a familiar face can earn you some slack if
your credit background is smudged. Small banks might offer lower
Be honest about why you want the loan. Your bank
may be able to offer you a loan option you hadn't thought of,
or perhaps that Jet-Ski you're eyeing can be used as collateral,
thereby securing your loan and trimming interest.
Don't fill out applications at several banks and
have all of them checking into your credit history. This can make
you look desperate and lower your credit score.