The past two years or so has seen us enter into what is being called a recession. the fundamental thing behind this recession was the meltdown of the banks that occurred.

Some say that the collapse was due to the entire financial world having stretched itself by being far too liberal with lending policy and giving credit to people who had stretched their borrowing capabilities too far. Eventually though, the bubble had to burst, with the collapse of one major financial institution and several banks needing to be bailed out by the Government.

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. Following the bailout, most stopped lending to the general public and businesses creating the ‘credit crunch’. Also by selling off parts of their business, some of the banks were able to raise much needed cash. Others just withdrew from the marketplace.

With over 15 secured loan lenders and several unsecured lenders, the market place was very much a different place three years ago. Today only a handful remain in operation with about three major secured loan lenders and one or two companies offering unsecured loans . Trying to get an unsecured loan at the moment is nigh on impossible as the lenders have tightened their belts. The banks are really only interested in giving loans to their existing customers.

There have been some high profile casualties in the industry. 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. Another household name to go was Welcome Finance, along with some of the other smaller unsecured lenders. Only recently, Blackhorse Finance 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. Getting credit is still tricky even now, although things have picked up a little this year but unsecured loans are still very hard to come by. Homeowners wanting a loan of several thousands of pounds are still able to obtain a secured loan assuming that they have enough equity in the home to do so. However, tenants and non-homeowners are still going to find it difficult to get finance if they are unsuccessful with their bank. Personal loan rates are coming down and are currently at their lowest for over two years, generating some competition between lenders.

For people seeking a smallish amount of money, they may find solace in the Payday Loan Companies that have risen in numbers and popularity over the last few years. These instant loans, or payday loans, have had a meteoric rise in popularity due to there being no real alternative in the marketplace.

So will we see a return to the somewhat carefree lending attitude of the 90′s? Credit will always be in demand but I doubt that things will get back to quite such a silly level as they were at.