Learn More About Personal Loans

By The Manolith Team on October 3rd, 2009

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In the wake of a worldwide recession, many lenders have become more particular about who qualifies for their loans. In times past, it was easy for someone with no credit or bad credit to find a lender that was willing to take a risk. It’s much more difficult now, but it is still possible for individuals to get personal loans.

What is a Personal Loan?
Personal loans are unsecured, which means they aren’t backed by any collateral. This inherently means higher risk for the lender because the borrower doesn’t have to use any homes, vehicles, or other property to back up the loan. If the borrower stops paying, then the lender has fewer options to get their money back.

Finding a Personal Loan

As many lenders fled the personal loan industry, others stepped in to take their places in hopes of making a profit on risky investments. Most big-name lenders turn down potential borrowers with bad credit, but there are still options available to you.

Searching online is one of the easiest ways to find a source for your personal loan. Instead of lending money directly to individuals, sites like LendingTree send your request to hundreds of lenders that are looking for borrowers. LendingTree claims that this forces lenders to compete with each other, which means borrowers will get lower interest rates. This certainly happens some times, but those with bad credit can essentially use the service to find lenders that are wiling to offer them fair rates for the personal loans that they need.

Borrowers should recognize that LendingTree is a lead generation business instead of a lender. They aren’t responsible for the offers that you get from lenders. In some cases this has encouraged borrowers to take deals from fraudulent lenders that really are too good to be true, so do some research before accepting an offer.

Using Your Bank for Personal Loans

You can also contact your bank about getting personal loans. Depending on the bank and your history with them, they might be more willing to offer you a loan even if you have no credit or bad credit. Again, you should expect interest rates that are higher than those that you would get with secured loans like mortgages and vehicle loans. That’s just the nature of personal loans. Still, many banks and credit unions offer their members personal loans with competitive rates.

What Interests Rates are Fair during a Recession?

You want to get a fair rate with your personal loan, but how do you know what is fair in today’s economy? One of the easiest ways is to visit MSN.com’s Money page. This site provides up-to-date information about personal loan interest rates, and will even tell you what rates are currently considered “low,” “average,” and “high.” This should help you decide how fair your personal loan offers are. Those with no credit or bad credit, however, should expect to pay higher interest rates.