Before you apply for a personal loan

• 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 personal 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 banks.

• 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 interest, too.

• 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.
• Check our credit card rates. They could be a better bet.
• Save some money for emergencies so you don't have to do this again. In the long run, it's cheaper.

-- Updated: March 19, 2004