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The Market for Personal Loans Loosens Up Again

February 16, 2012 | Comments: 0 | Views: 108

The banks have been pretty tight-fisted with personal loans for four years now. These days though, they are finally beginning to see a little sense. They've gained enough confidence in the state of the economy and the job security for the average American that they're beginning to loosen their purse strings once again. Personal loans are here again.

The thing with personal loans is that they are completely unsecured - just like credit cards. And so, they usually charge you a high rate of interest to try to cover the high levels of risk they undertake. Over the past four years, they've tried to deal with the safest borrowers possible. They've been lending to only creditworthy borrowers with impeccable records.

These days though, they are far enough away from the recession that they seem to have forgotten about it. They're beginning to roll with lower credit scores, and they are going with more flexible rules to do with all the eligibility qualifications they usually ask for - they are rolling out the red carpet for their borrowers.

The very process of applying for a personal loan is far simpler these days. They make you jump through fewer hoops. That's a sign that the banks are trying to see things completely differently now. At most lenders, the sums they lend tend to be small. About $10,000 at the most. But they are far more willing to go through with these than they are with home loans or mortgages or lines of credit.

The banks are falling over themselves to roll back all stringent rules that they have had in place for four years now. For instance, starting this year, the many banks like SunTrust have lowered their credit score requirements. They're also going to entertain borrowers who are already quite leveraged with lots of loans. Other institutions like US Bank are trying to make personal loans more attractive by making them cheaper. Their best interest rates start at 9%.

Their approval process will be a lot simpler than what you are used to seeing. You still don't get away without providing proof of income though.

Easy credit isn't as wonderful a thing as it might appear though. They push people to take risks that they can ill afford over the long run. There are lots of people out there who take a personal loans to buy luxuries like large-screen televisions. And oddly enough, people take out personal loans to pay off credit card debt - a move that may not really do much for their overall level of debt.

If used properly though, easy personal loans could help lots of financially smart people run their lives better.

Find out more about the author in:debt consolidation loans

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Source: EzineArticles
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