Personal loans become popular option as old school lending returns
July 21, 2009 by admin
Watching classic television evokes an era when consumers would only borrow money from a local bank where they established a relationship with the local banker. The fallout from credit card lenders tightening guidelines, home equity lenders reducing available credit and tightened guidelines in the finance market is pushing more consumers to apply for personal and signature loans for their borrowing requirements.
In years past, consumers had multiple borrowing options with short term financing for large retail purchase, weddings and home improvement projects. With fewer options, today consumers are contacting their local banks or credit unions to find out the availability of a signature loan, or scouring the Internet to find a personal loan lender. Personal loans, often feature a higher level of underwriting than a traditional credit card, but generally do not require the borrower to provide collateral (assets) to obtain the loan.
Personal loans offer borrowers multiple options with a tremendous amount of convenience. Consumers can apply for loan amounts ranging from $500 to $100,000 and lending decisions are generally based on the borrower’s credit history, job stability and income. Personal loans can be obtained in as short as twenty four hours with select lenders. Personal loans are not lines of credit; they offer the borrower a fixed amount of money to be paid back over an agreed period of time.
As lending takes a turn towards the past, personal loans evoke an era when consumers had fewer options to obtain money and banks and lenders held their customers to a higher standard. The major change is the method for obtaining these types of loans. Today, consumers can apply from the convenience of their home computer and have the money wired into their account in a short period of time. The ability to obtain a personal loan to finance a home improvement project, health care expense or take a vacation has become increasingly more popular. The downside to this increase in popularity is that consumers can become the target of bait and switch advertising much easier. Most states have yet to regulate the personal loan marketplace. Credit cards and payday loans are typically regulated either at the national or local level as regulators try to curb predatory lending practices and provide limitations on fees and interest rates. Personal loans have yet to become regulated to the extent of their counterparty options.
Consumers shopping for a personal loan should have a general idea on the amount of money they are attempting to pay, a comfortable payment amount and knowledge of their current credit situation. This information will greatly assist them as they shop for a personal loan lender to cover their financial goals. Consumers who have relationship with a local lender should compare their offerings versus companies who are Internet based to ensure they receive the best loan terms. The next time you have your tv on and a classic black and white movie hits the screen you may realize the more things have changed, the more they stay the same.