A Short History of Loans
A loan is a debt supplied by either a person or organisation to another person or organisation. Loans often include a rate of interest, which serves as financial compensation and is applied to loans as a repayment date is agreed.
There is no recorded date for when loans first came into existence. Lending has always been a form of human nature, so the practice of loans is likely to stem back thousands and thousands of years. In fact, there are historical documents that date back as far as this with monetary loans being referenced in the Bible.
The oldest loaning records available date back to Assyria and Babylonia where merchants made grain loans to farmers and traders. Aspects of the loan were to modern standards, with lenders accepting deposits, repaying and including interest.
European economies didn’t incorporate loans into everyday life until the 13th Century. It was then that the churches realised the financial benefits loan interests could obtain.
Indentured
Indentured loans were used in Europe from the Middle Ages through the 1800’s. They were used to allow the landed gentry and richer tradesmen to borrow money in order to buy land or a home. In return, they would be expected to work off their debt by spending time working on the lender’s estate.
Banking
At the time, lenders recognised the value of repeat custom. Therefore, an early form of sustainable lending was being practised. In Italy, local market goers were setting up stalls in order for people to lend money. An interest rate was added which the borrower was expected to pay back, which is still a concept used widely in loaning today. The only difference between then and now was the large variations in interest rates between lenders.
Modern Day
In most countries nowadays, a central bank or financial authority will regulate money lenders. There is now a limit on how much money can be lent, which makes the risk of huge debts occurring less likely. There are a number of loans available today, including secured, unsecured, pawnbroking, demand and concessional.
Did you know pawnbroking is considered one of the most competitive financial services? It works to utilise assets in a sensible and controlled way. Cuttings the Pawnbroker lend against gold, jewellery and fine watches, and you can obtain a loan up to £50,000.
For more information, contact a member of the Cuttings team by visiting our contact page or by giving us a call on 01843 584550.