|
Tenen Haus
> Loans
> Bank Loan - UK Guide
 An introduction to what a bank loans - how do bank loans work?
You'll find a variety of loans options available to you from any bank whether you're a consumer or a business. Loans play a major part in how banks make their money - and most of them will offer a full range of related products and services. So, for example, you'll be able to buy secured or unsecured loans from most banks. These two types of loans are the core loans products on offer in the market today. With a secured loan you put your property up against your loan as security - this buys you discounted interest rates. With unsecured loans you don't need any security - but you'll pay higher rates. The option you choose will usually also dictate how much you can borrow and for how long. Many banks will have different types of loan available in these two product categories. Some will offer specialist products such as graduate loans, car loans or home improvement loans. Some prefer to simply keep their loans general. All will have a range of business loans available as well. Bank loans work in the same way as any other loan. You ask to borrow money, your application is assessed and, if you're accepted, you'll get the loan. The money you borrow will usually be repaid every month over the time period that you choose until it is all paid off. Time periods will vary according to the type of loan you choose and the sums you borrow - so, they can be anything between 1-25 years on average. When you apply for your loan you'll be given an interest rate or APR (Annual Percentage Rate). This is the extra you'll pay for being allowed to borrow the money. Each of your monthly repayments will partly go towards repaying your original loan and will partly pay off some of this interest. So, once you've finished paying, you'll have paid back your original loan and the interest on top. Banks don't tend to be as flexible as many lenders when it comes to lending money. This is based on the fact that they are actually investing their other customer's money when they give out loans and this makes them extra cautious. So, they may well ask what you need the money for and they will run stringent checks on your application before they accept you. They are also less likely to give out loans to people with bad credit histories or other financial problems than other lenders may be.
|
|