4 keys to personal loans applications

Couple discussing financial loan with financial advisor

An unsecured personal loan can mean the difference between paying off high interest debt or helping to make things right at a time when you can least afford for things to go wrong. An unsecured loan is approved based on factors like your credit score, your ability to repay, credit history, and, possibly, job stability. These loans don’t require collateral in exchange for the loan. Before you apply for a personal loan, it’s important to get familiar with the four key parts of the application.


Ask yourself why you need this money? It’s common to use an unsecured personal loan to consolidate debt or to cover an unexpected expense. Knowing your purpose upfront can help you decide if this type of personal loan is right for you. For example, if you have certain assets like a home, you may be better off with a home equity line of credit (HELOC) to pay down high interest debt.

Personal finances 

A lender may look at your debt to income ratio which tells lenders if you’re financially able to manage another monthly payment and successfully repay debts. If you’re unsure, try a Loan Payment calculator to determine what your monthly payment might be. Then check your budget to make sure you can afford another monthly bill. Adding another creditor could stretch your personal finances too far and make it difficult to keep up with existing payments.

A missed payment could negatively impact your credit score, which could make lenders hesitant to approve your request. Approvals for LGFCU personal loans are not only based on your credit score. The Credit Union may be willing to work with you even if you have less than perfect credit.

Interest rate

Are you borrowing at a price you can afford? If not, it’s okay to search for a better rate. You may even have to reexamine your loan request: is it based on a real need such as a financial emergency or a want (e.g. pay down debt).


While the interest rate is an important part of any loan, you’ll also need to know and understand the terms offered to you. A closed-end, unsecured loan will have a specific start and end time for paying back the funds. Again, this is where you’ll need to consider if you’re able to meet those terms, if another loan type is better for you, or if maybe now is not a good time to take on more debt.

An unsecured loan can be a lifeline to help handle an emergency expense or provide breathing room when consolidating debt. Whatever your need, be sure you’ve taken the time to consider all aspects of borrowing.

The advice provided is for information purposes only. Contact your loan representative for additional guidance. 

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