The best way to discover a personal bank loan for the holiday seasons

More people take out unsecured loans during the holiday season than at additional times of the year. But this year, a personal loan for the holidays might be a little tougher to discover. Your credit rating will make a difference on that account. Interest rates are low, which is less of an incentive for banks, which are currently hoarding reserves, to lend.

Why unsecured loans may be tougher to get

Since banks are borrowing from the Federal Reserve with zero percent interest rates, it might be harder to obtain a personal loan for the holidays. Instead of risking default by granting personal loans, private loans, mortgage loans and additional forms of lending, banks are using that cash to invest for profit. There is an example of this in 2010 that is quite clear. Banks bought a ton of United States of America Treasury bonds. Loans have gone down to $69.5 billion although the Treasury has lent banks about $127 billion. The Fed ends up lending the banks cash with almost zero interest just to have money lent back at a higher rate of interest because of treasury purchases.

End result from personal loan searches

All this means that banks will not lend unless they absolutely have to. That means that people have to have really good credit scores to get personal loans. The average interest rate on unsecured loans with a decent credit rating is 12 to 18 percent. But if your credit is less than stellar these days, it does not hurt to start with the financial institution or credit union where you put your money. A good relationship with a bank can help a lot. It will give your chances a boost. You are able to get a personal bank loan online if that doesn't work. However, a lower credit rating could result in interest rates as high as 20 percent.

Alternative to loans throughout holidays

Peer-to-peer lending is another option that will give you less of an interest rate on unsecured loans. There is no bank involved in peer-to-peer lending. On peer-to-peer lending websites, consumers lend cash to each other. Lenders will bid in order to obtain lower interest rates for borrowers on some peer-to-peer lending sites. Lenders choose who they lend to and make loans from as little as $25 up to $25,000. Getting an unsecured loan for the holidays from a fellow consumer could land a competitive interest rate without a perfect credit score.

Citations

Credit Loan

creditloan.com/blog/2010/11/30/personal-loans-may-get-harder-to-come-by/

Forbes

forbes.com/forbes/2010/1220/investing-lending-club-credit-cards-personal-loans-for-fun.html

Subprime Blogger

subprimeblogger.com/2010/12/01/bad-credit-unsecured-personal-loans-gain-in-popularity-as-christmas-shopping-season-approaches/