Where Did Personal Loans Go?

Where Did Personal Loans Go?

Where Did Personal Loans Go?

If you looked up and down the high street only a few years ago, you will have retail premises abundant with loan companies, either banks or just financial outlets offering one form or another of personal finance. In the credit boom times, these companies were popping into existence everywhere and offering finance at massively discounted rates in a personal finance bidding way. This was seen as a win-win situation for consumers and employees of these companies alike, however underneath it all, that was far from the truth.

The problem was that the money being lent out to customers was being put into ever riskier situations, and ultimately, that money, was and still remains the money of investors.

Because the money was lent on such a risky basis, much of this was found to not be coming back into the banks and financial companies from the people who borrowed it and signed agreements for it in the first place, which meant that the financial institutions were losing liquidity and ultimately their standing on the stock markets. As soon as investors got wise to this situation, they removed their investments from the companies, meaning the lenders, banks and financial institutions had less money this is what essentially caused the world wide credit crunch.

As a consequence, governents had to step in and strengthen the financial companies and lenders to make sure they didn't fall to the sithe of the markets. The knock on effect of this was that they had to very much tighten their belts to keep the government happy and to ensure that investors came back to pump their money into them. Tightened belts meant less lending and more importantly, less risky lending.

This has meant that many of the personal loan products people came to know and depend on vanished completely from the markets (as they were extremely risky from the investing parties point of view) and this meant the high street outlets also disappeared as there were less customers they were able to help. If you look around the markets what you'll find now is that lenders have switched more to an online basis and are offering alternative finance products such as guarantor loans. These products give greater security for the lender whilst still providing consumers with a reasonable and decent credit offering. They are also a great substitute for personal loan products of the past, as they offer competitive rates whilst still being flexible to the applicant or borrower.

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