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Latest Consumer News

Personal Loan

What are personal loans?
Personal loans are also known as term loans in the UK. This is because these loans are taken for a particular period of time and then have to be returned along with interest as agreed in the terms and conditions. The personal loans in UK are typically offered by banks and other financial institutions. The personal loans are given for a fixed term with regular monthly repayments. The interest rate may be fixed or variable and it depends on the type of loan and also on the lender. The lenders have their own condition of approving the loans and deciding the maximum amount they will lend to you. Customers who pay their loans early are normally entitled to a rebate on the total cost of credit. The amount of credit to be given is calculated according to a fixed formula.

More choices
There was a time in the UK and all other countries when you needed a personal loan but you did not have many choices. Only your neighborhood bank or your friends or your relatives would give you a loan. There was no fixed rate of interest or any other fixed norms. The conditions were decided at the time of giving the loan. The procedure was not standardised. The amount of loan that you could borrow was also low and loans in excess of 10000 pounds were virtually unheard off.
Consumers who pay off loans early are entitled to a rebate on the total cost of credit. This rebate is calculated using a specific formula. However the situation has changed now. The personal loan market in UK at present is worth trillions of pounds. One of the major reasons for this uplift is the easy availability of money. The overall economy is growing at a rapid pace and loans are encouraged to develop and grow. You can simply log on to any of the hundreds of British personal loan sites and simply read the conditions and apply for a loan there. Or you can simply pick up the phone, talk to the representative and get a loan arranged in minutes.

How much should you borrow?

You should always borrow not more than what you can afford to pay later. Typically British loan companies encourage you to borrow more as the interest rates on higher loans is less and the administrative costs on smaller loans is small in comparison to larger loans. For example if you borrow a loan of 10000 pounds, you could end up paying an interest rate of 20 per cent.

What type of loan?
You can either go for secured or unsecured loan. In the case of secured loan you provide a certain type of security to the lender in the form of a house or your car in case you are not able to pay your loan on time. As a result the lender is definitely going to give you more loan as he knows his loan is a security cover. A secure loan, on the other hand is a loan without any security cover and hence the amount of loan given is less in comparison to secured loan.


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