If you've been paying any attention to the news in recent weeks, you can't fail to have seen some of the masses of coverage of the current financial and economic circumstances, where major banks and other financial institutions are experiencing what's become known as a 'credit crunch'.

While much of the information provided focuses on high finance and might not seem particularly relevant to the average Joe, the current crisis will have far reaching consequences which will effect the lives of many people, and not just the tycoons dealing in millions or billions of dollars.

The principal problem for the banks is, in simple terms, that they don't have access to credit as cheaply as they have done in recent years. The interest rates that they charge each other for short term borrowing used to finance loans and mortgages have risen dramatically, as analysts worry about the effects of bad debt resulting from sub prime lending over the last decade or so. As financial institutions have to pay more for their borrowing, they need to recoup the money somehow, and the obvious choice is to raise the level of interest they charge on their consumer lending. The upshot is that people with variable rate loans, mortgages, and credit cards are likely to see their interest charges hiked.

This will mean higher repayments, and many economists are predicting that more and more people will get into trouble servicing their debts, with steep rises in foreclosures, repossessions and bankruptcies expected. While this is obviously bad news for the borrowers concerned, it will also have ramifications for the economy as a whole, even affecting those who are not suffering from debt problems and are in the market to take out a personal loan.

As lenders become ever more twitchy about their potential exposure to bad debt caused by bankruptcy, they are getting more and more cautious about who they will lend money to, and how much they will lend. Acceptance criteria are becoming stricter, and people with less than perfect credit are finding it harder to get their loan application approved.

Alongside this, the size of homeowner loans is being squeezed. Where once lenders were happy to lend up to the full value of the property the loan was secured on, many are now reacting to the possibility of a fall in the housing market by limiting their lending to 80% or even less of the collateral value, to ensure that in the event of a bad debt they can recoup their outlay.

So, considering higher interest rates, lower lending levels, and tighter approval criteria, we can probably say that the era of cheap and easy credit is, if not completely over, then definitely on the retreat. But what does this really mean for people looking for a personal loan?

The upshot is that it's likely to be a few years before we see a better time than now for applying for a loan. By acting quickly, you should be able to get yourself a reasonably low rate loan with a fixed interest rate, and be approved before the full force of the credit crunch filters through to consumer borrowing.

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Michael writes for Loan Vision, where you can find low rate loans, both secured and unsecured.