Consumers Nervous About Taking on Debt

Online, April 20, 2010 (Newswire.com) - Consumers who try to borrow money from traditional banks and finance companies may be finding that it is harder than they expected to get unsecured personal loans these days. Part of the reason for this phenomena is that banks are being pushed by regulators to tighten their lending standards because of the meltdown in the financial sector - due in large part to weak lending standards for the housing market.

Unemployment remains high. In March 2010, the average overall rate of unemployment, at 31 weeks, is at its highest level since the end of World War II and there were a total of 2.3 million unemployed college graduates in March 2010, 1.45 million more than in March 2007.

Add to this the fact that consumers who would like to borrow are finding it hard to get credit at banks, which are being pushed by regulators to tighten their lending standards, and it is easy to see why this is having a chilling effect on the confidence of potential borrowers and may are opting to defer unsecured personal loans or other credit options until after the economic recovery strengthens.

It is no wonder that borrowing has been in decline for over a year. According to the Federal Reserve, consumer borrowing fell by $11.5 billion in February, and had fallen in all but one of the twelve preceding months.

A resurgence in personal consumer lending is seen by many economists as critical to the recovery of the U.S. Economy. Federal Reserve Chairman Ben Bernanke commented to an audience in Dallas that the economy seems to have stabilized and is growing again but threats remain. We are far from being out of the woods," Bernanke told the audience, "Many Americans are still grappling with unemployment or foreclosure or both." Unless consumer borrowing stabilizes, it could derail the recovery because it will lower consumer demand for goods and services in the larger economy. In 2009, demand for goods and services by individual consumers accounts for 70 percent of total economic activity.

Get pre-qualified for a unsecured personal loan of from $10,000 to $250,000. Click here to learn more.