Changes in the market
In the last few years, there had been a rapid rise in the number of lenders that offered unsecured loans. There were several sub prime lenders all over the world that offered easy, fast funds to almost anyone. However, when the economy crashed and a large number of borrowers started defaulting on their loans, the loan companies did not have any way of recovering their money. With unsecured lending, the lenders do not have any form of security to rely on in the event that the borrower defaults.
This had made it very difficult for the loan companies to recover their losses which resulted into various companies going bust or at least withdrawing their unsecured products from the market and the repercussions are felt today throughout the world.
Changes in the unsecured lending market
Borrowers that apply for unsecured loans would realize that several changes have taken place since the credit crunch. The first major change is the number of loan companies that offer unsecured funds today. Borrowers no longer have the same number of choices in lenders since several loan companies have exited the market and many more have stopped offering their unsecured products. This means that the borrowers would have to look harder in order to find the kind of loan that they require and they would have fewer loan products to choose from.
Another major change that has taken place in the market for unsecured lending is the borrower profile that the loan companies cater to. In the past, bad credit borrowers found it quite easy to find an unsecured product whenever they needed. No credit check loans were common place and there were several companies that offered easy loans to borrowers with low scores, arrears, bad credit history, CCJs, IVAs and even bankruptcy in their credit history. However, post credit crunch the lenders are much more careful.