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The Return of the Personal Loan

Need money? Just ask your bank. The rates are higher, but the complications few.

Personal loans are gaining popularity with credit-crunched consumers who want to consolidate debt or pay off big-ticket purchases with simple-to-use loans that don't pack any surprises. Most personal loans aren't secured by an asset. That means you'll pay a higher rate than you would for a home-equity loan (assuming you could get one), but typically lower than a credit-card rate. Discover's Nick Brown says customers usually see interest-rate savings of two to four percentage points when consolidating debt in a Discover Personal Loan.

Interest rates on personal loans depend on your creditworthiness, but the term, rate and monthly payment are fixed, so there's no confusion (or decision to make) on how much to pay each month. Origination fees are low to nonexistent. There shouldn't be a prepayment penalty, and late fees typically run about $39.

Wells Fargo has seen applications grow at double-digit rates in recent months. The bank's loans range from $3,000 to $100,000 for up to five years. Rates range from about 9% to 20% or more. Discover will lend $3,000 to $25,000 for two to seven years to prescreened invitees. CitiFinancial loans start at $300 and go up to $15,000 for one to five years. Capital One's loans, for existing customers, range from $3,000 to $25,000, for 12 to 72 months. Many credit unions also offer personal loans.