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Personal Loan
A personal loan with the bank is similar to a credit card because there isn't anything to back it up. They trust that you will pay it back based on your financial situation without anything like a car or home to sell if you fault the loan. The main difference between a personal loan and a credit card is that they give you all the money right away. If you get approved for $5,000 then they'll give you a check for it within a couple of days. A credit card gives you an available $5,000 to spend at your leisure and they assume if you take the full amount then you should be able to afford that monthly payment.
Be careful of personal loan interest rates. They're very high just like credit cards because, like I already said, there isn't anything tangible to back up the loan. Usually a personal loan is for the short term so the interest rate doesn't come into play as much, but if you need one over 5 years or so, you should beware of how much interest you're going to pay. Personal loan interest rates are currently around 13-14%.
Some Reasons To Get A Personal Loan
1. To improve your credit score with the bank. Getting any loan and paying it on time improves your credit score no matter what the size of the loan is.
2. If you need $3,000 but you only have exactly $3,000 in your savings and you don't want to spend it all. Living check to check is very difficult and it shouldn't be done if you can help it. In this situation you can actually get a much lower interest rate because you have the money to back up the loan in your savings. It will be held in the bank and you wont be able to touch it until you pay down the loan, but you will get even lower than the current interest rates of 5-6%.
3. The bank doesn't make you tell them what the personal loan is for, because it's personal. They don't care because they don't have anything to back it up anyways. They just check your borrowing power and approve you for the amount that you can afford.
Why You Might Not Have Been Approved For Your Personal Loan
1. Your credit score was too low. Your credit score comes into play a lot more with a personal loan because there isn't anything to back it up. So if you credit history shows that you have a credit card that you stopped paying then you'll have a very hard time getting the loan.
2. Your debt to income ratio was to high. This is a very important and very logical number. They basically take all of your monthly bills and weigh them against your monthly income to see how much you can afford. With that number they can figure out your borrowing power, which is the number you can actually afford such as $10,000 for a loan. You can figure out this number before going to the bank by using an mortgage calculator and figuring out the monthly payment you'll have. Then you can see if you'll be able to afford the loan.
If you cant get approved for a small personal loan then you should seriously start thinking about improving you credit. Your debt to income ratio is much too high and you probably have very bad credit. You should take this seriously and talk to a financial specialist about quickly improving your credit score.
A personal loan can be very helpful if you need a quick sum of cash. You probably cant get much over $10,000 or they'll ask you to get a home equity loan so that they have a tangible back up plan for getting their money back. | 
