Banks are Back In The Shells
Loans Advice April 13th, 2009Once again the banks are turning down applicants at the same rate beautiful women turn away hopeful men on a Saturday night.
The old saying that banks will only lend to people that don’t need it, is as relevant as ever. Loan applicants might as well stop dreaming, because the vault is closed. While governments are trying to spend their way out of the financial crisis, the banks don’t follow suit. The scare from the last few years have send banks sneaking back into their old shells and credit is no longer as easily available as we have become used to.
Is it fair that people no longer have access to credit, considering that it’s their own tax money that are being used to bail banks out of the financial mess they got themselves into? Going from one extreme to the other seems wrong and though we know that pendulums swing from side to side until they settle in the middle, it shouldn’t be like that in this case.
It makes sense to tighten the lending criteria, but it’s not necessary to strangle it completely. People need money to realise their potential and in the long run cutting loans will have a huge negative effect on society. The banks have to live up to their responsibility and play their role in society.
People have started to turn to alternative credit providers such as payday loan companies. According to research from the UK comparison aggregator, Money Supermarket, the UK market for short term payday advances increased by 55% from may 2008. The higher demand for the quick cash loans are a good indicator of the economic pressure people are feeling. We can only be grateful that the payday lending industry has been cleaned up significantly over the past few years and can now be considered a smart and safe alternative to other short term loan products.
However banks should really take responsibility and find a better balance. We all recognise that the criteria and lending practises that lead to the downfall of the banking industry have to be revised but jumping into the opposite corner is not the solution.
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