With Credit Crunch Over Is Borrowing Money Easier

The UK is officially out of recession, but does that mean the green light for being able to borrow money and the return of the times where being accepted finance is easy?

Everyone must remember why the UK, and the rest of the World, got into recession in the first place. Many say it was due to what many deem as "irresponsible lending" by banks and lending institutions to people who simply could not afford the money they were looking to borrow. Therefore those that borrowed the money could not pay the banks back and many of those banks had borrowed the money in the first place to lend. It is a chain where someone has to lose out. If a customer physically cannot pay a loan back then the bank could not get back any money and they therefore were in debt themselves.

So, now the recession is over it does not mean that we will return to the days of excessive and over borrowing. Banks must, and have, learn from their mistakes and be careful to not lend at stupidly low rates and also not lend to people who pose too much of a risk for them getting their money back.

The UK Government is keen to get everyone lending again as they do say that a certain degree of credit needs to be revolving around the system to get things to happen.

Some people become oblivious to the changes in the ability to borrow and wonder what is different now than before the recession. Before the finance crisis happened homeowners were able to borrow more than their property value up to 125%. This type of borrow was available at extremely attractive APR's as well.

Will these levels of credit return? Very unlikely. It is thought that banks have learnt their lessons and this type of borrowing will never return.

One aspect of borrowing that has flourished in the last 3 years are Payday Loans. Small, unsecured loans for people looking for a short term cash injection. Typically the amount applied for is around the £300 for 1 week but people can borrow up to £1,000. Approval is very quick as well with quick cash. Many customers are approved within an hour and can have the money deposited in that time as well. Some customers may need to provide proof of earnings but many do not.

The Payday Loan has come from the USA but has become extremely popular in the UK, Canada and Australia also. It is purely designed to bridge the gap between the need for some instant loans and the next pay day and is not designed for long term borrowing solutions.

Another aspect that has taken off are log book loans – essentially these are secured loans but not on your house – on your car. A simple way of borrowing and some people see these as a good short term borrowing solution like a payday loan. The only problem with logbook loans is that they can take longer to be approved.