Despite Eased Lending Policies, Loans May Not Be Affordable

Comstock Images/Thinkstock(NEW YORK) -- Many banks are easing lending policies they tightened back when the recession hit, making it easier for consumers to take out home and auto loans today.

But before taking out a loan, you should think again on whether or not you really can afford to pay it back.

Neil Renquist of Advisers.com says some consumers who qualify for loans today may be putting a big strain on their finances.

"People mistakenly believe sometimes getting approved for a loan from a bank means you can afford it, and banks often times just don't have the full financial picture of the household," Renquist says.

He advises consumers to do an affordability test to make sure they can afford a big loan.

"The household balance sheet is just a great way to get that sense of affordability," he says.  And one way to do that is to "sit down and on a daily basis throughout the month track your spending."

Copyright 2011 ABC News Radio