how to return personal loan

With home equity borrowing vaporized and credit card limits tightening, some banks are going back to the past. But getting a loan isn't easy

Remember the personal loan?

A few decades ago, it was one of the most accessible ways to finance a big purchase, meet an unexpected expense or consolidate other debts.

Then came credit cards and home equity loans. Easy to get, even easier to tap and tax-deductible (in the case of home equity), they quickly trumped unsecured consumer loans, which often required an applicant to walk into a bank branch, bare his or her financial soul to a loan officer and jump through hoops to qualify.

Banks liked credit cards and home equity loans, too. They were much easier to underwrite and cheaper to manage. Until a couple of years ago, "most big banks would actually hand you a credit card application if you walked in asking for a consumer loan that was on the smaller side," says Gerri Detweiler, a credit adviser for consumer information Web site Credit.com.

But the real-estate crash and credit crunch vaporized home equity and credit card lines alike. Now, nearly 25% of American homeowners owe more on their mortgages than their homes are worth, according to First American CoreLogic. And in 2008 and 2009, credit card issuers have cut $1.5 trillion from consumers' available credit lines, according to research firm TowerGroup -- and will continue to cut through the end of 2012.