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How to Decide the "When" of Obtaining a Personal Loan

[Jan 15, 2009.]


At this point, it goes without saying that the last year have been a nutso one for credit of all types. Humongous financial institutions have collapsed under the weight of bad loans.

What does all this mean for the so-called "little people," who may need a personal loan to meet short-term obligations and didn't have anything to do with all this Wall Street stuff?

It means, in short, that the "when" of obtaining a personal loan is more important than ever. Think about three time-related things when trying to get an unsecured personal loan.

1. Watch the Markets, They Matter

The people and institutions making personal loans watch the markets religiously, and base lending decisions on what's going nationally and even globally.

More than any single stock or bond, though, it's vital to get a sense of how things feel. That may sound like sugary nonsense, but it's the essence of human nature.

Similar to asking a friend for a favor when he's in a good mood, apply for personal loans when the markets are up.

2. Lock That Rate

Today, the benchmark rate on a 30 year fixed mortgage dropped below five percent. Even renters should be happy at this development, because overall interest rates remain low.

Those that can locate a manageable interest rate on an unsecured personal loan should do so now. China is not going to buy our debt forever, so the time to borrow is nigh, if borrow one must.

Make the lender commit to an attractive rate while the chance is there.

3. Know Why

The best thing anyone who needs a personal loan can do is to evaluate why they need a personal loan, and what their income situation looks like today and what it might look like tomorrow.

After all, unemployment is up, and even those who thought they had secure jobs are suddenly feeling a bit less secure. The economy should come back, but it may not be for a while.

Taking out a personal loan for an unnecessary purchase such as a flashy car probably isn't a great decision. Taking out a personal loan to pay necessary expenses, however, is the reason why unsecured personal loans have a worthy purpose in this world.

Before deciding when, then, ask why, and insist on a good answer.


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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