Personal loans come in many shapes and sizes. The most common, it seems, are now those that require a payday advance or handing over a car title. Many wonder, though, what happened to the traditional personal loan from a traditional institution. A combination of dropping credit scores and rising requirements have made these loans less visible than before, and some may wonder about the viability of the model. Issues have come up on both the lender and borrower side of the equation, making for an uncertain future.
In many ways, personal loans represent a unique danger to both lenders and to those borrowing. For lenders, the loans really represent an amount of money lent out with no particular attachment; while these loans might be used for anything from car repairs to hospital bills, they rarely have the same kind of anchor point as a home loan or auto loan. As such, it may be harder for many institutions to feel safe in getting their money back, especially considering the cavalier attitude towards credit that many seem to have.
At the same time, it can be come difficult for consumers to pursue these loans. Rising credit requirements have made it difficult to find any kind of loan, and personal loan requirements seem to have grown out of the reach of many. Unfortunately, these loans are generally only sought out when needed, so it seems like a fair bit of the intended target clientele has been stricken from the access list of this particular product.
It remains to be seen if personal loans remain a viable alternative as the credit system continues to evolve. Some individuals have certainly become more careful about taking any kind of loan out, while most lenders are tightening requirements for handing out any lines of credit. The days of relatively easy personal loans have ended, and it is not certain if the idea of the legitimate personal loan will stay around.