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How to Qualify for a Personal Loan: Live in Alabama

[Apr 2, 2009.]


The Wall Street Journal ran a fascinating story on the front page the other day, describing some of the geographical considerations that affect personal loan availability.

The article, aptly titled "Many Smaller Cities Dodge Crunch in Consumer Lending," proved that Huntsville, Alabama is by far the greatest city in America--or at least one of the greatest cities to live in if you're looking to qualify for an unsecured personal loan.

In Huntsville, Alabama, consumer lending rose 13.2% per household in the fourth quarter of 2008. Meanwhile, in places like California and New York, lending was dry enough for drought conditions.

Some critics claim that this is actually a bad sign, because it indicates that people in these smaller cities are starting to spend above their means just like their coastal counterparts have done for years. Still, it's hard to argue that credit availability is not a good thing for those who need personal loans.

What explains this drastic difference? Why should it be easier to obtain an unsecured personal loan in one area of the country as opposed to another?

The answer is, at heart, quite simple, and important for borrowers to understand: credit is a communal thing. Credit availability, in particular, depends heavily upon the behaviors of local lenders and local borrowers. Even in a global economy, this remains a fact.

When, for example, giant financial institutions are practicing wildly irresponsible lending behavior concentrated in a certain area of the country--Countrywide and California come to mind--the repurcussions will be felt throughout that geographical region when things turn sour.

The behavior of borrowers, of course, is equally important. If everyone and their mother in the neighborhood has loaded up with enough consumer debt to kill a horse, it's going to be harder for the one neighbor who isn't overleveraged to get a loan.

By the same token, responsible lending practices by local banks, and responsible borrowing behavior by local citizens, give people in certain neighborhoods an advantage when applying for consumer credit products such as unsecured personal loans.


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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