The History of Personal loans
Payday loans in today’s world play a very important role. They help people to cover basic needs. They are issued in case an individual has an emergency situation.
The modern payday loan is quite different from the initial concept of microfinance. Contemporary small loans are issued for different purposes. Initially, personal loans were issued to fight poverty.
The Brief History
The very first personal loans started to appear in Europe in the 19th century. They were not issued by banks. They were issued by rich people to the poor ones. When a person issued a loan to another one, there was hardly a written agreement.
Personal loan term was coined by Muhammad Yunus. He is the father of a personal loan that we use today. Here are some interesting facts one should know about small loans:
- Muhammad Yunus found Grameen Bank. Mr. Yunus was born in India. It is a very poor country. There are many people who live in very bad conditions. Grameen bank started to distribute small loans to such people. It was not done by any financial institutions till Grameen bank appeared.
- Loans helped many households to raise own enterprises. Many people created capital. They bought land and started to practice agriculture. It brought to families moderate income. It saved many households from death.
- Small loans soon after became very popular around the world. Many socially responsible banks started to distribute these types of credits. Till emergence of Grameen bank financial institutions distributed mainly large loans to rich entrepreneurs.
- America adopted small loan crediting very quickly. There appeared numerous institutions that issue personal loans.
The Main Features of Personal loans
This is a brief history of a personal loan evolution. Today personal loans are distributed in on both sides of the oceans. Here are the main characteristics of modern personal loans:
- They can be issued within several days. It does not take much for financial institutions to accept a loan request. The application process goes quite quick. The applicant is asked to present a package of documents. It has to include the income statement, employment statement, copy of passport, and a credit score.
- They can be as high as 2000 dollars. In the majority of cases, institutions issue a loan that can range from 400 – 1000 dollars. The higher is a loan sum, the higher an interest rate will be.
- There are fines if a loan is not returned in time. Loan agreement states a certain date when a personal loan has to be returned.
These are the main things a person has to know about small loans. It is one of the most beneficial financial products today.