Are Bank Loans Really Your Best Bet? - By: Molly Wider

"Canada is on track to post one of the worst economic performances in its history...pushing the central bank to go beyond interest rate cuts..." (Reuters). This is good news for consumers looking to apply for a bank loan. However, this doesn't necessarily mean that banks are willing to give out those loans. In fact, fewer loans are being doled out to consumers with great credit, let alone those that do not have perfect credit. This leaves a lot of people in a sort of lurch. On the one hand, banks are slashing interest rates left and right. On the other hand, those same banks aren't exactly handing out loans.

Where does this place the consumer that's hoping to obtain a loan? Perhaps the best hope for loans in this economy is to look at alternatives to traditional lenders. Private lenders are still giving out loans to those that need them, and most of these lenders don't rely upon past credit histories to determine an approved loan application. In fact, many private lenders are opening up their doors to those that have been rejected by the banks. As more and more consumers are discovering, seeking a private loan through an alternative lender is one of the few ways to secure a loan in today's economy.

While banks are continuously fluctuating between approving loans and denying them, private lenders have managed to remain stable. Some consumers may choose to wait out this recession in the hopes that banks will soon start approving loan applications once again, though this wait could be a long one. Millan Mulraine (economics strategist at TD Securities) recently stated that "there is no getting away from the fact that the Canadian economy is in the depths of a rather profound economic recession...it clearly appears that the economy may have taken a dramatic turn for the worse" (Reuters).

With no end to the current recession in sight, banks aren't likely to start approving loan applications any time soon. Borrowers that need money right now aren't likely to wait for banks to begin doling out loans once again. Instead, well-informed consumers are looking to private lenders to gain the funds that they need. This push towards private lenders is backed by the fact that these alternative loans don't require massive amounts of paperwork and excessive credit checks. It's safe to say that those weathering the traditional loan storm should begin looking to alternative sources, or be swept away by the continuously tumultuous economy.

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