A loan is where a person (called the borrower) borrows a sum of money of variable amount form another person (called the lender). It is in effect a type of debt as whatever amount you borrow from the lender you have to pay back usually in regular monthly instalments over a given period of time, anywhere from one to 25 years.
Loans are used for various reasons, such as to buy a car, home improvements, to go on holiday or debt consolidation in order to pay off existing debts.
Most people who want a loan go to a bank or building society, but there are loans available online as well. The loans that are to be found online are for people with a less than perfect credit rating and who stand little chance of getting a loan through the usual avenue of a bank or building society. They are usually for a small amount and come with a very high interest rate and a shorter repayment period.
In order to apply for a loan you must be over 18 years of age, have a bank account and be employed, especially so if you want a loan from a bank or building society.
Loans can be secured or unsecured. A secured loan needs a certain amount of collateral up front whereas an unsecured loan does not.
No matter where your loan comes from it will have a certain amount of interest attached to it so you will end up paying back more money than you borrowed originally.
Unsecured loans usually have a higher interest than secured loans.
The amount of interest can affect the amount of your repayments so it is important to check them out carefully. With a fixed rate loan your repayments will remain the same every month for the life of the loan. With a variable rate loan your payments will go up and/or down depending on what interests rate do in general. If they go up, so will your payments and likewise should they go down.
It is important that the borrower looks carefully at the loans available and to pick one that suits their individual circumstances as far as amount, interest rates and repayments are concerned before committing themselves.
Loans are used for various reasons, such as to buy a car, home improvements, to go on holiday or debt consolidation in order to pay off existing debts.
Most people who want a loan go to a bank or building society, but there are loans available online as well. The loans that are to be found online are for people with a less than perfect credit rating and who stand little chance of getting a loan through the usual avenue of a bank or building society. They are usually for a small amount and come with a very high interest rate and a shorter repayment period.
In order to apply for a loan you must be over 18 years of age, have a bank account and be employed, especially so if you want a loan from a bank or building society.
Loans can be secured or unsecured. A secured loan needs a certain amount of collateral up front whereas an unsecured loan does not.
No matter where your loan comes from it will have a certain amount of interest attached to it so you will end up paying back more money than you borrowed originally.
Unsecured loans usually have a higher interest than secured loans.
The amount of interest can affect the amount of your repayments so it is important to check them out carefully. With a fixed rate loan your repayments will remain the same every month for the life of the loan. With a variable rate loan your payments will go up and/or down depending on what interests rate do in general. If they go up, so will your payments and likewise should they go down.
It is important that the borrower looks carefully at the loans available and to pick one that suits their individual circumstances as far as amount, interest rates and repayments are concerned before committing themselves.
