The Federal Deposit Insurance Corp. suggests in the Spring 2013 issue of the FDIC’s Consumer News that consumers needing small, short-term loans include information about their local banks’ loan products when comparison shopping for loans.
According to a 2011 FDIC survey, one out of every 5 American households using alternative loan providers (such as payday loan companies and pawnbrokers) for small loans did so because they mistakenly thought banks only made large loans, such as mortgage loans or auto loans, not small loans.
Many of those surveyed also assumed they simply would not qualify for loans made by banks.
However, in a second 2011 survey the FDIC determined that eight out of 10 banks do, in fact, offer small, unsecured personal loans. According to the agency, these banks offered loans of amounts under 2,500 with repayment terms of 90 days or longer, with APRs at or below 36 percent, and loan approvals in less than 24 hours.
The FDIC notes since alternative loan company loans can be costly, it makes sense for consumers to at least explore options at their bank to see if the bank’s terms can be more beneficial.
For additional information, see “Need Cash Fast? Ask Your Bank,” available in the spring 2013 “Consumer News” issue (found at www.fdic.gov).