Due to a lowering of interest rates, more Americans choose to take out a personal loan to pay for certain expenses. If you want the best interest rate that is available to you, you will need to do some preparation to get started. Borrowers requesting personal loans at credit unions went up by about 5 percent. This uptick in personal loan requests came after interest rates dramatically dropped in 2013.

If you want to pay for home repairs or improvements, a wedding, or medical bills, personal loans can work as a wonderful way to pay for these expenses. You can borrow amounts ranging from $1,000 to $100,000. If the personal loan you take out is unsecured, you will not need to put up any collateral.

These days personal loans have become a standard financial product with amounts that can go into the six figures. You can also get these loans at a good interest rate, even lower than you could get on a credit card.

Obtaining a Personal Loan: The Next Steps

Take the following steps to get a personal loan from most lenders:

  1. Figure out how much you will need to borrow
  2. Order your credit report and look at your credit score and history to see if you can get approved by the lender
  3. Look at the rates from both local banks and online lenders. For some borrowers, online lenders could work as a better option because they often have alternative requirements to banks
  4. Millennial borrowers should consider online lenders as they often consider factors such as your career and education history
  5. When you choose a lender, contact them for the next steps in the application process

You can go to a lot of sources to access personal loans. There are credit unions and banks, many of which don't require you to come to their physical branch. These brick and mortar institutions also offer easy applications that you can fill out online. Some credit cards such as Discover offer borrowers opportunities to take out personal loans from them.

The Application Process

The application process for personal loans works much as it does for any other loan. The lender will do a credit check. Higher credit scores will result in a lower interest rate.

However, potential lenders will need a lot more than a credit score to make their decision. The financial website NerdWallet says that a potential lender may ask you for some or all of the following documents and information:

  • Proof of address
  • Identification
  • Proof of income (W-2s, tax returns, bank statements)
  • Employer information
  • Monthly financial debts
  • Alma mater name and your major

The money that you can borrow and the time that you will have to repay will depend on the lender and the terms they give you. Many credit unions, for example, give lenders a 5-year term with a maximum interest rate of 17 percent. But this can all depend on your lender, credit history and score, and employment prospects.