More Tennessee residents are taking out personal loans to pay down debt - but while some borrowers are finding relief, others end up exacerbating their debt problem.
After falling out of favor during the recession, personal loans are once again being handed out by lenders for everything from kitchen remodels to debt consolidation, reports The Wall Street Journal.
With tighter lending standards and low real estate prices ruling out the possibility of a home equity loan for many homeowners, lenders see personal loans as a way to grow their business. Banks mailed out 424.8 million offers for personal loans in 2011, compared to just 290.5 million in 2010.
Personal loans don't come cheap, but they can be more affordable than credit cards. A typical interest rate for a borrower with good credit is between 9 and 15 percent for a five-year personal loan, whereas interest rates on credit cards are often more than 20 percent.
Some banks are sweetening the deal further by issuing "debt consolidation specials" with rates as low as 6.5 percent if customers agree to allow their payments to be directly deducted from their accounts.
Many Americans have relied on credit cards to make ends meet during the recession. When our paychecks didn't cover car repairs, doctor's bills, or phone bills, we paid for them with plastic.
Unfortunately, leaning on the crutch of credit can be a hard habit to break. This is where Tennessee bankruptcy comes in handy.
People who take out debt consolidation loans or transfer credit card debt to a card with a lower rate often continue racking up debt. As debt continues to grow, the lower interest rate offers little relief.
Sadly, many people with personal loans find themselves burdened with new credit card debt on top of loan payments.
Consolidating debt is just another term for moving debt around. If debt is running your life, rearranging it isn't enough - you need to eliminate debt. Filing for bankruptcy in Tennessee provides the power to do just that.
Filing for bankruptcy in Tennessee gets to the root of your problem by wiping out unsecured debt for good. Because the best interest rate is no interest rate at all.
More Blog Entries:
Personal Loans Come Back, by Ruth Simon and Andrew R. Johnson, The Wall Street Journal