MAR 05, 2014

Need a $12,000 Loan

I need a short-term loan of $12,000. What are my options and where can I find such a loan?

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Bill's Answer: Answered by Mark Cappel

Before I explain your options for a loan, I want to take your thinking in a different direction for a moment. If your debt is unsecured, such as credit card debt, perhaps another loan is not your best solution. See the resource Debt Relief Options: Which is Right for You? to learn how to resolve debt without a loan.

Finding a Loan

If you do not have any collateral, what you seek is a signature loan, which is also called an unsecured loan or personal loan. Personal loans are risky for lenders due to their lack of security and relatively high default rate. Therefore, most lenders charge high interest rates on personal loans, especially those for people with a checkered credit history.

You may find that using an unsecured personal loan to consolidate debt can actually cost more than continuing regular debt payments. Depending on your financial situation, there may be a few alternatives to a traditional personal loan that could assist you in resolving your debt.

I have five suggestions for you. First, read the Federal Trade Commission document, "Payday Loans Equal Very Costly Cash: Consumers Urged to Consider the Alternatives." You may not be considering a payday loan (I strongly discourage payday loans), but the FTC's suggestions are sound and I recommend reading this document to determine if any of the suggested alternatives to payday loans will work for you.

Second, consider a loan from a peer-to-peer (p2p) lender. P2p loans are, as the name suggests, loans between people that are mediated by a third party. In some p2p loans, the borrower writes a proposal and investors choose whether to fund the loan. In other p2p loans, an intermediary funds the loan, combines the loan with others, and sells shares in the loans to investors. I know of two companies facilitating peer-to-peer loans in the US today: Prosper and Lending Club. (Readers: If you know of others please comment below.)

Consider a p2p loan as an alternative to bank financing.

Third, if you have a 401(k) account, ask your 401(k) plan administrator if loans are allowed under your plan. Not all plans allow loans, or limit loans to certain circumstances. I do not recommend taking a hardship distribution from a 401(k) account unless your situation is dire.

Fourth, visit the Loan Resources page to find out more about the loan options available to you.

Fifth, if you own a home, you may want to consider a mortgage refinance to tap into the equity you have in your home. makes it easy to compare mortgage offers and different loan types. See the mortgage refinance savings center to get no-cost quotes from up to four pre-screened mortgage lenders.


You mentioned securing a loan with your vehicles. This is called a title loan, which is allowed under law in many states. I urge you to consider an alternative. Title loans are very expensive. Also, readers have told me that title loan lenders are very aggressive in collecting these loans. Missing a payment means repossession of your vehicle, and I do not need to give you parade of horrible outcomes if your vehicle is taken from you.

Consider bankruptcy or your other debt resolution options.

I hope this information helps you Find. Learn & Save.



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Comments (9)

Elba P.
Essex, CT  |  August 07, 2013
Interesting content, finance for starting small business is very important, I find this share very crucial because I like run my enterprise soon and I'm sure it will obviously be complicated.
Dan R.
Olathe, KS  |  February 13, 2012
i owe a friend 12000 for a loan he gave me and he needs the money bad my credit is not good and i am starting a new job this month what is my best option if any?
February 13, 2012
Our article above contains five suggestions and a link to a government Web page that has even more. Do any of the suggestions we mentioned seem possible for you in your situation?
Carol D.
Jeffersonville, IN  |  May 23, 2011
My husband is trying to get a short term small loan of $1000. Can we use both our incomes but just his credit? Mine is not very good and we really need this right now.
May 23, 2011
The answer to your question depends on the policies of the lender. In general, the answer to your question is yes.
July 14, 2010
You must disclose your marital status in the loan application. However there is no investigation as such.
Derek B.
North Pekin, IL  |  December 14, 2010
When was this article written? Are P2P loans still a reality today because signature loans sure are not!
Bill B.
San Mateo, CA  |  December 14, 2010
Signature loans are still available, but may be called different things. Wells Fargo, for example, offers what it calls a personal line of credit.
Melissa .
July 14, 2010
Do banks research marital status of a person applying for a mortgage in CA?
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