With the downturn of the mortgage industry, most banks are now tightening the credit standards. Gone are those days where homebuyers can get loans by exagerrating their income on their application (also called as “stated income”) with a teaser rate (ARM jumbo loans).

For regular personal loans, there are some banks that are really strict that they would check a person’s credit before the banks offer a loan. If the person has a bad credit history but he/she can afford the payment, most banks will offer secured loan to this person. The collateral could be a car, 401k or IRA retirement funds, or just your regular savings account. One of the advantages for having a secured loan is that the interest rate maybe lower compared to the unsecured one. But as you know, if you can’t pay the loan, the banks will repossed the collateral.

On the other hand, there are some lending institutions that are really lenient to their loan applicants that they would offer personal loans without checking your credit as long as you can provide that you have a decent job (a very good source of income) with decent salary. This means that you can really afford to pay back the loan. The drawback about this type of loan is that the interest could be really high (around 10-25%).

So consumers, need to shop around to find the best interest rate and the best deal if they are interested in obtaining personal loans.