CML Finance

Loans and finance guide.

Will Brexit Uncertainty Effect the Availability of Personal Loans?

There is a lot of speculation about what might happen when the UK leaves the EU and maybe even whether it will happen at all. While everything is uncertain it is best to make plans so that you are prepared for whatever might happen. One thing that you may feel concerned about is whether personal loans may be harder to get due to all of the uncertainty. It is good to give it some thought and prepare for the worst just in case.

Why would uncertainty effect loans?
It is difficult to predict the future and to know exactly what might happen even if we have seen a situation happen before. In this situation it has not happened before and so it is even more difficult to predict. However, we can apply some common sense and make a few guesses.

When there is uncertainty in a market or economy people do not want to invest in it. They worry about what might happen to their money if they do and so tend to put it elsewhere. This may also apply to consumers who may feel that they should save their money rather than spend it so that they have some in reserve just in case they use it. People may also decide that they would rather not borrow money for larger purchases, perhaps for home restoration projects, mortgages or things like this because they want to wait and see what will happen first.

This can lead to two possible scenarios. If banks have more savings in them, then they will be able to lend more money as they effectively lend out the money that people pay in to savings accounts. If people are taking less loans though they may make loans dearer as they need more profit but they could make them cheaper to try encourage people to take them out. There is also the fact that the lenders may be uncertain about what might happen and may decide not to lend so much themselves just case people will not be able to make their repayments.

So uncertainty could have all sorts of effects on lending and it is hard to predict what those might be. It will depend on the thoughts of the individual lender and how they respond to changes in the market.

What is likely to happen?
It is very hard to predict what is likely to happen. It could be that there is a very short effect and then things will just carry on as normal. This could just last a few hours, few days or few weeks and would not have much of an impact. However, there could be a long-term effect which lasts years and this could have more of an influence of the availability of loans.

One thing we can be pretty sure of is that there will still be lenders and they will still want to lend money so that they can profit. So loans are unlikely to disappear altogether. The types of loans are not that likely to change either but the biggest effect is likely to be that the price of them will change. Whether that will be a rise or fall is hard to say at this point though.

What shall I do to prepare?

It is hard to prepare for something unpredictable. However, if you ensure that your finances are in order then you will be in the best position to tackle anything that comes. Therefore, make sure that you are budgeting properly so that you can easily afford all of your bills. It could be wise to put some money into a savings account just in case prices rise or your income drops. Try to have a plan for how you might manage if there are no personal loans available and you do need one. Perhaps check your credit record is correct and see if there is anything you can do to improve it so that you have more options with regards to potential borrowing. See if you can repay some of your debts so that it is easier for to manage financially. If you have no debt then try to put some money away as savings so you have some money to fall back on should you need it. I would also think about things that I could do to reduce my spending if necessary. I would not necessarily do it right away. There must be things you buy that you could go without. Perhaps make a list and then you can work through it if you need to and reduce what you are spending. If you think you could not cut down anymore then come up with some ways you could make extra money. Perhaps do both and then you will have something to work on if the situation does change and you find that you are struggling financially.

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