Private lenders – how does the boom come about?

Private lenders are hopeful for more and more people when the creditworthiness for a bank loan is insufficient. But who is behind private lending, how do these upheavals in credit come about? What are the risks associated with the boom in personal loans?

The current boom in using private lenders instead of bank loans is easy to explain. Provider side: The monetary policy of the Capital Lender prevents inflation adjustment on the savings book. Small savers who do not want to sacrifice their savings for euro rescue have to look for other safe forms of investment. The personal loan offers the best prerequisites for this through high capital splitting and fair interest. The necessary market for personal loans is also thanks to European politics.

Demand: Agenda policies and stricter legal requirements for banks across Europe often make personal loans a source of finance. In comparison to the historical appearance of private loans, only the marketplace has become electronic today.

Examples in history where personal loans were booming almost always led to huge upheavals. The sterling crisis of 1929-1931 in England provides a fine example of this. It caused up to 20 percent unemployment and the suspension of the gold standard valid at the time. With a view to the south of Europe, we are already partially comparable figures.

International personal loan

International personal loan

From an international perspective, the private lender from Germany is a “little fish”. The impact of a boom in private loans can be seen very impressively in China today. China is a huge exporting country. Similar to how Germany is interested in a weak euro, the Chinese government wants to keep its export goods cheap. Within China, the ability of private companies to invest is weakened. You simply don’t get a bank loan. Market reaction: Even today, entire industrial parks are financed exclusively with private funds.

Risks: Nevertheless, the development must be treated with great skepticism. Interest rates of up to 50 percent per annum are required for the investment capital in China. Many of the young companies were unable to generate these returns, even in China, the economic miracle country. In the meantime, gigantic production complexes are empty. The company bosses are fleeing from their creditors and unpaid workers.

Loan from private donors in Germany

Loan from private donors in Germany

The personal loan in Germany is only a development in recent years. Market leaders, in the meanwhile numerous offers, are two large portals. Financing opportunities exist for the refinancing of a home as well as for the loan of a children’s bike from a single Hartz 4 recipient.

There is no such thing as a lending regulation, like a bank. The personal loan is not subject to the provisions of banking supervision. Each private lender decides on his own investment. A bank is still pulling the strings in the background. As the point of contact for both sides, it ensures that the credit transactions run smoothly.

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