More and more people are getting the news that their Credit Bureau-free loan has been rejected. But why? Business with Lite Lender has been booming for many decades, how is change happening now? One thing remains unchanged: the need for loans with poor credit ratings remains unchanged. The great strength of the market economy is always to find a way to meet an existing need. As evidence, the credit market has found an alternative way to get credit despite bad credit or companies.
Credit Bureau-free loan declined
Politicians recognized the risks they had created themselves on the credit market far too late. For a long time, she had managed global money flows according to a complicated, yet functioning principle. With the political desire to introduce the euro and open up the capital markets, the system got completely out of joint. Politically desired was an open system that should make profits in international banking easier. As a result, European banks bought heaps of bad personal loans from around the world.
If a Credit Bureau-free loan is rejected today, this can be attributed to the implementation of the Basel agreements. The Basel I – IV agreements were concluded as a measure to ward off future crises. The agreements are signed by all countries that belong to the euro area geographically or economically. The purpose of the agreements is not to hinder trade in international funds. Trade should only become safer. Among other things, the guidelines according to which banks are allowed to lend have been more standardized. Instead of preventing the trade in bad loans, the “child with the bathroom is thrown out”. Risk credits should no longer be available if possible.
What new opportunities does the capital market offer?
Private loans offer the alternative to Lite Lender. This time it was the Europeans who copied from the Asians. In Asia, there has long been credit from private investors. Again, this development is associated with great risks, which politicians are ignoring. More and more companies can only use personal loans as a source of credit.
A look at China shows where it will lead if entrepreneurs are decoupled from bank money supply. The private market has spread. Investors charge up to 50 percent interest on risk loans in China. The wave of corporate bankruptcies that could not bear this interest burden was swept under the carpet only thanks to Chinese politics.
Again, it will be the unemployed and people with low credit ratings who will end up paying the bill in Germany. They still have good prospects for a personal loan at fair interest rates. Rising demand will fuel the market and further spur interest rates. Maybe politics will finally realize that they are not financial experts. Perhaps it will then also mean: personal loan rejected and no longer only Credit Bureau-free loan rejected.