Lenders

When it comes to finding the right personal loan, the bottom line for most people is going to be a favorable low interest rate. However, individual circumstances vary, and sometimes a person will need a loan sooner than a traditional lender can give it, or they need the loan for a brief period of time, or they don't have the credit history necessary to qualify for the best interest rates.

As a result, different lending options have emerged that cater to different circumstances, and each will offer different interest rates. Read on to get an idea of how these different personal loan lenders compare.

The Traditional, Bank-Issued Personal Loan

For most people, a bank will be the first place they turn to when they need a personal loan. However, there's a major liquidity crunch going on, and banks have cut way back on loans of all kinds -- credit card limits, for example, have been slashed for even people with the best credit and payment histories.

Not only are they approving drastically fewer loans, but they're also charging higher interest rates for them. These rates vary by location, with the best rates in New York hovering around 16%. In Los Angeles the lowest is about 18%, but in Cheyenne, Wyoming a borrower could get a loan for as little as 9%.

On the plus side, banks are very often trusted names, and operate under stringent federal regulations. That sense of security is a welcome one when it comes to money.

Cashcall

Cashcall offers people living in New Mexico, California, Idaho and Utah loans with an APR of 139.34%. Their standard loan of $2,600 costs $75. Thirty-six payments of $298.94 later, the loan is paid off.

Clearly, this is going to be the loan of last resort for most people, but if circumstances are dire and there aren't any other options, then it's (arguably) better than nothing.

Check into Cash

Specializing in payday loans and payday advances (more or less the same thing), Check into Cash offers customers small loans (between $100 and $800) against their next paycheck.

On a $100 loan, for example, the fee is $15 - and the whole amount must be repaid (not $85, as you might think). Loans of this type are for people in a real jam, but like the jaw-dropping CashCall loan, if they prevent something worse from happening then they're ultimately worth it.

Peer-to-Peer Lending

A booming new lending, loaning, and investing vehicle, peer-to-peer loans are made by individuals to other individuals, with no banks involved. Driven by the Internet, peer-to-peer lending is still experiencing growing pains, but the fact that they're growing so quickly suggests a promising future.

They're more of a risk for investors because there's always the chance that a borrower can default. For borrowers, however, they offer some of the lowest interest rates available. Two of the biggest names in peer-to-peer lending are Prosper and Lending Club.

• Prosper.com

Although not available everywhere, Prosper.com is currently advertising personal loan rates of 7.5% for people with credit scores over 640.

Prosper's auction process among lenders can also send your initial rate down if you're a particularly appealing loan prospect. Additionally, Prosper lets you make early loan payments and pay the bill off before it's due.

• Lending Club

Like Prosper, Lending Club brings investors together to offer borrowers personal loans at phenomenal prices.

Currently, Lending Club offers potential borrowers with the best credit scores loans with 7.89% interest rates.

In an effort to help homeowners modify their mortgage loans, some lenders are taking steps to lower the principal amount, according to a new report from the Office of the Comptroller of the Currency (OCC). The report shows that while many lenders are taking the route of temporarily suspending interest to allow homeowners to catch up on payments, others have become even more lenient, lowering the amount of the principal owed for struggling borrowers.

The number of lenders taking this route has increased dramatically. In fact, from the first quarter to the second, the number of loan modifications involving a shift in the principal jumped from 3.1 to 10.1 percent.

There are a few reasons that banks are considering this option:

• Mortgage-servicing firms receive financial incentives for making modifications.
• Banks have more flexibility to modify loans because their balance sheets are starting to stabilize - and they're starting to raise fresh capital.
• "Taking the hit" now with a portion of the loss upfront is worth the possibility of having the remaining adjusted balance - with interest - paid in full down the line.

Of course, it doesn't hurt that the Obama administration has be putting pressure on banks to since the Home Affordable Modification program was put in place in March. Also, many banks simply saw that modifications weren't doing the trick; a whopping 56 percent of borrowers whose loans were modified in 2008's second quarter were default again a year later.

But experts say to not expect a principal adjustment as the first course of action from your lender. First, the lender will likely adjust or temporarily suspend your interest rate. If that doesn't work, the lender may extend the term of the loan. And finally, you may have some of the principal deferred.

Have you had a loan modification? Was part of your principal deferred in the process?

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