Personal Loan Applications and Consumer Confidence

[Apr 28, 2010.]

 

Consumer confidence, according to the most recent report from Thompson Reuters, was up strongly for April to a metric of 57.9 percent. Expectations were that the metric would come in at 53.5 percent.

What does this mean to the individual who is considering taking out a personal loan?

Personal Loan Applicant Overconfidence Can Be Dangerous

The first thing to note about putting in a personal loan application is that applicants need to carefully evaluate their state of mind when they apply. People who are in the position to apply for an unsecured personal loan, especially a bad credit unsecured personal loan, should be wary of being overconfident.

Overconfidence can manifest itself in not thinking about the cost of a personal loan, not scrutinizing how they plan to spend the money, and even assuming that their steady job is steadier than it really is.

An unsecured personal loan is usually repaid in regular installments over a period of 12 to 36 months. A loan of $2,500, over 36 months, might have a payment of around $250 per month.

Being overconfident about having an "extra" $250 a month lying around is never a good idea.

Consumerism Itself Can Be Dangerous

One of the things that Rebuild.org does a nice job with--if we might be permitted to give ourselves a quick pat on the back--is urging borrowers to consider the cost-benefit analysis of taking out a loan. Columnist Francine Huff does an especially nice job of urging borrowers to stay out of unaffordable loans.

But beyond the affordability of the loan, borrowers must really consider the purpose of the loan. Consumerism, meaning the irrational belief that "the clothes make the man," so to speak, is a dangerous approach to take when dealing with personal loans.

Again, this brand of loan is not the cheapest form of credit out there, so borrowers should undergo a buying process that includes some hard questioning as to whether the purpose of this loan is worthy of the cost.

Sometimes, this leads to drawing back from taking out the loan. Other times, at least the borrower can enter the transaction with confidence that this is the right decision.

An Unsecured Personal Loan, Used Wisely, Can Help Restore Confidence

Of course, the point of taking out an unsecured personal loan is not to avoid danger, but to improve life. Luckily, a well-used personal loan can do exactly that.

To cover a necessary car repair, a tax bill that's inducing stress, or even a new suit for an interview, the best personal loans imbue borrowers with confidence.

 

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.