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The Demise Of The Finance Industry Is Making It More Difficult When Getting Credit

The recession is now well into its third year and not really showing signs of abating. One of the instrumental factors behind the current recession was the almost total collapse of the banking system.

The collapse was due to the banks getting over ambitious and lending recklessly to people that were never going to be able to afford to repay all their debts. The bubble burst in the end though with the collapse of at least one major financial institution and several banks needing to be bailed out using taxpayers money.

So what happened next? With the banking world in virtual meltdown, the banks had to do something in order to shore up their fragile positions. Once the Government had saved the ones closest to collapse, the banks decided to stop lending in order to build up their cash reserves thus creating the ‘credit crunch’. Some banks also liquidated their assets by selling off parts of their business. However, some just decided to retire from the marketplace.

In the world of personal finance, there were over 15 lenders offering secured loans in one form or another and several companies offering unsecured loans. The industry is almost unrecognizable now with only three or so secured loan lenders in operation and one or two offering unsecured loans. Unsecured personal loans are really hard to come by nowadays as the lenders became reluctant to lend to anyone that even looked remotely likely to default on the loan. The banks are really only interested in giving loans to their existing customers.

There were some quite high profile companies that closed down as a result of the crisis. One of the first to bite the dust was First Plus. Barclays, who owned First Plus, called time pretty early on much to the surprise of everyone. Welcome Finance, another household name, closed down along with a few other minor unsecured lenders. Only recently, instant cash loans withdrew from the personal credit market leaving a huge void in the market for tenant loans.

The finance industry is still trying to pick itself up. Things are not all that better even today and the unsecured market is a real problem. Things are a little easier if you are a homeowner wanting to borrow several thousand pounds and have sufficient equity in your home. However, tenants and non-homeowners are still going to find it difficult to get finance if they are unsuccessful with their bank. There seems to be a little competition creeping back into the industry as lenders have been competing to see who can get the lowest personal loan rates.

One oplace that you may be able to get a small unsecured loan is from a Payday Loan Company, something that has become increasingly popular over the past couple of years. These instant cash loans, or payday loans, have had a meteoric rise in popularity due to there being no real alternative in the marketplace.

Will there ever be a return to the crazy lending that has taken place over the last fifteen years or so? It is unlikely to get as bloated and carefree as once was but there will always be a requirement for credit so as things start to recover, I expect a few more lenders to start up.

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