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    The Significance of Personal Loans

    Lakisha DavisBy Lakisha DavisJanuary 3, 2024
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    The Significance of Personal Loans
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    Imagine being able to fund a business idea or even a dream of yours without worrying about the lack of funds in your pocket. Picture yourself standing in front of the doors of a new restaurant that you’ve been dreaming of opening for years or in front of a bus that you’ve been wanting to use to start your own transport business – these ideas are all made possible through personal loans. 

    The Rise of Personal Loans

    Personal loans have certainly gained in popularity over the last decade, with a sky-high inflation rate all across the world, including Europe and other continents, people are seeking other ways to fund their ideas rather than only depending on their savings. Citizens in countries that are known for being first-world places and rich in their economy are even seeking more personal loans, such as reputable countries such as northern European countries where the locals have found personal loans to be one of the best ways to get an idea off the ground. 

    It’s a form of lending that is smart but that many countries’ governments are trying to restrict, due to the rapid decline an economy can experience if too many loans are being taken. Certain countries, like Norway, even have registers for the populare personal loans, called forbrukslån in Norway, where the lenders see how many personal loans and creditcards you have. There are laws prohibiting lenders from giving more than five times a yearly income in loans in total. Whilst the benefit of taking a personal loan, with often lower interest rates than a typical credit card or other form of credit offers, many European governments are advising against it. 

    The Rise in Costs

    The fact of the matter is that yes, inflation is at an all-time high, making the cost of living almost unbearable for most Europeans living in Norway, Sweden, Germany, Austria and alike. The rise of additional costs, such as gas, electricity and water has also added further financial constraints on people. The notion of being able to save a chunk of a monthly salary is an idea that seems to have become obsolete. Nonetheless, people are seeking personal loans to either make up for their financial shortcomings or use them for debt repayment, which governments are afraid will put their citizens and economy in a downward spiral. The idea to live more frugally until inflation drops is something many European governments are advocating for more. Therefore, many countries are banding up and making it more difficult for people to acquire a personal loan, in the hopes that they can save the economy with a more long-term mindset. 

    Looking to the Future

    Personal loans have been around for a large amount of years. When economies were booming, personal loans were both easy and advantageous to come by, with banks even bringing out different types, like models of cars. For example, there are unsecured loans, where borrowers don’t have to put down any collateral and by just having a good credit score, could already get a personal loan. Nowadays, this sounds almost encouraging, which is something that both governments and banks no longer want to support as much as they did a few decades ago. 

    How will people fund their business ideas, home improvement projects, fund emergency expenses or even simply invest in themselves without the promise of a personal loan? It’s hard to know but many governments across Europe are placing a stronghold in trying to mitigate personal loans as much as possible. The idea behind it makes sense, avoid taking debt now while times are tough and then when times get better, come out without debt. It’s a positive notion but is it one that people can live according to and still manage to get by in their daily lives? For now, that answer is uncertain but only time will tell, so stay tuned.

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    Lakisha Davis

      Lakisha Davis is a tech enthusiast with a passion for innovation and digital transformation. With her extensive knowledge in software development and a keen interest in emerging tech trends, Lakisha strives to make technology accessible and understandable to everyone.

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