It was announced this fall that Bank of America, one of the largest creditors in the nation, will stop offering any unsecured personal bank loans as of October 31, 2009. Bank of America has, along with several other lenders, been one of the primary sources of personal loans for people with less than stellar credit. The company has a large amount of bad loans still on the books today, and they are trying to stay solvent by dumping this bad debt practice.
Unfortunately for many people, this means fewer options. Sometimes, a consumer may need access to money for purposes of debt consolidation, or a life change such as going to college or a wedding. Personal loans that are unsecured have traditionally been one way for consumers to address these kinds of events and these kinds of needs.
Some options still exist
Not all personal loans are going away, of course. The company will still offer home equity loans and other loans that have some sort of property as a security on the loan. It is unsecured loans, which put the bank at much higher risk than with other types that are discontinued.
Still, there are many other options available for consumers that need personal loans that are unsecured. Wells Fargo, as well as several other major banks, intend to continue to offer these types of loans as they have in the past. While it’s still a little early to tell, it is of course possible that some of these other banks will follow suit. Still others may jump at the opportunity to get into a new market, even as Bank of America exits.
Local credit unions are especially known for offering personal loans to their members. While the terms on an unsecured personal loan won’t be as favorable as they would be for a secured loan or another type of loan such as a home loan, the credit union may still be competitive with those national financing companies who are still offering personal loans.
There are also other lenders that specifically work with borrowers who have less than stellar credit and who need personal loans. These lenders are more designed to handle the risk that comes with unsecured personal loans.
Do your homework
Before you decide to get a personal loan, make sure you do the legwork. Know what you’re getting into. Know how high the interest rate is, and recognize that the key is paying these types of loans off as rapidly as you can so as to avoid massive fees and interest charges.