3 Things You Didn’t Know About Personal Loans

Life is notorious for throwing difficulty in the way of average people. Those individuals often seek assistance through the help of person loans. It’s becoming much more difficult to get personal loans now that banks have tightened up their lending regulations. Simply put, banks are now interested more in lending to businesses and to people with tremendous collateral to put in play. Still, if you need a person loan, you do have some options. You just need to know what you’re doing to navigate the crowded and convoluted world of personal loans. Here are three things you might not have known about personal loans.

Most personal loans are guaranteed by collateral
It’s incredibly difficult to walk up to a bank and walk away with a personal loan unless you’re willing to put up some collateral in exchange. This might come in the form of a title loan, where you borrow money against your vehicle. It might come from predatory pawn loans, which will pay pennies on the dollar while taking your prized property as collateral.

They won’t always go on your credit report unless something goes wrong
If you take out a credit card and make your payments on time, you will build up some positive credit reporting history. Your credit score will increase as your activity gets better and better. If you take out a traditional personal loan, though, you might not receive this benefit. Personal loans are not considered revolving accounts like credit cards are. This means lenders are not required to report your positive history. Rather, they will only report if something goes wrong and you stop paying the loan. This creates a losing situation for borrowers because borrowers won’t derive benefits from good activity.

Personal loans are harder to get in the post-Recession era
The Great Recession put pressure on banks to stop handing out money to any person who walked through the door. Many large banks have stopped giving out personal loans altogether. Others have tightened up their requirements, only giving out personal loans for specific purposes. This has created something of a financial underworld. People who want to borrow money today are mostly forced to go to title lenders, pawn shops, and small financial firms that charge massive interest.

Unless you have a long-standing and established relationship with a lender, your chances of getting a personal loan are slim in today’s era.

It’s still possible to get money today, but you have to be very savvy to do it. You must select the right lender, have the right reason, and be willing to back your promises with some collateral. Be willing to pay high interest rates, too. This is why so many people are turning to sharp credit card offers today.