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How Confidence and the Herd Mentality Affect the Personal Loan Market

[Feb 19, 2009.]


It's human nature to want to be a part of something. At the same time, it's amazing how everyone is saying what everyone else is saying about how poor our economy is performing.

That's not to say that our economy is not poorly performing. America recently hit an all time high for people receiving unemployment benefits: 5 million. Rather, the reason to point out this stampeding herd mentality is to know a self-fulfilling prophecy when one sees one.

There can be no doubt that the constant negativity from the media and society as a whole is reinforcing cautiousness about lending in general and personal loans in particular.

The Overriding Importance of Confidence

Without confidence in future employment and income, borrowers are wary of taking out personal loans, even for beneficial purposes such as school or to buy a needed car.

Without confidence in the solidity of their balance sheets and future existence, banks are wary of lending period, let alone putting out unsecured personal loans.

And yet an unsecured personal loan is exactly what many people need today, to ride out these challenging times. And banks can make money doing this sort of business.

An unsecured personal loan is a gesture of confidence.

Provided that the funds are used for a worthy purpose, taking out a personal loan can change a life for the better. Meanwhile, well-made personal loans can provide badly needed profits to struggling banks.

The vicious cycle might just turn virtuous.

The Media Hype Never Stops

Maybe not today, maybe not tomorrow, and maybe not even by the end of the year, the news should stop being all bad, economically speaking. If only because readers and viewers will be so tired of the stuff.

Then, perhaps, the media may glom onto another hot story: the recovery. And like a snowaball rolling down hill, the story may grow bigger and bigger and faster and faster until one day...

Confidence has returned.

In the meantime, getting an unsecured personal loan won't be as easy as pie. But neither is it hopeless. And every personal loan that does go out and is repaid can bring the day of regained confidence closer.

Little by little.


About Author:

Andrew Freiburghouse is a writer and businessman. He has worked as a magazine reporter, tax preparer, screenwriter, copywriter, and loan officer. He graduated from Santa Clara University in 1999 with a B.A. in English. Andrew was born and raised in the City of Los Angeles.

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