Collateral and, historically, age, race, sex, and ethnicity. They’d also look at how well you were dressed because 100% of the time you went to the bank in-person to get a loan. Also, your bank wouldn’t be far from where you lived and the local population wasn’t so large that they couldn’t just “ask around” the local social network to see if this man before them was upstanding enough to warrant giving them money.
Also note that people didn’t need to borrow money as much as they do today. You wanted a new home appliance like an oven or refrigerator? You saved for quite some time to buy it.
There weren’t as many things to spend your money on either!
I’m a bit confused by your response. Are you suggesting going back to the old ways (as your description of those old ways encapsulates) or are you pointing out the shortcomings of the old ways (of which there are many)?
I’m just telling it like it is. The old ways were terrible! However, being local and requiring proper collateral instead of just giving n people money en mass—knowing that the percentage that default will be outweighed by the percentage that pay the loan back (and ripping people off by making them pay the interest up front)—was probably better for the economy.
Not everyone should be allowed to amass debt the way we currently allow it. Furthermore, if people couldn’t get loans for school so easily (in fact, guaranteed!) then college tuition would be but a fraction of what it is today.
Collateral and, historically, age, race, sex, and ethnicity. They’d also look at how well you were dressed because 100% of the time you went to the bank in-person to get a loan. Also, your bank wouldn’t be far from where you lived and the local population wasn’t so large that they couldn’t just “ask around” the local social network to see if this man before them was upstanding enough to warrant giving them money.
Also note that people didn’t need to borrow money as much as they do today. You wanted a new home appliance like an oven or refrigerator? You saved for quite some time to buy it.
There weren’t as many things to spend your money on either!
I’m a bit confused by your response. Are you suggesting going back to the old ways (as your description of those old ways encapsulates) or are you pointing out the shortcomings of the old ways (of which there are many)?
I’m just telling it like it is. The old ways were terrible! However, being local and requiring proper collateral instead of just giving n people money en mass—knowing that the percentage that default will be outweighed by the percentage that pay the loan back (and ripping people off by making them pay the interest up front)—was probably better for the economy.
Not everyone should be allowed to amass debt the way we currently allow it. Furthermore, if people couldn’t get loans for school so easily (in fact, guaranteed!) then college tuition would be but a fraction of what it is today.