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Without credit our entire financial system would not exist. Most successful
businesses have relied on credit or loans to get started up, and most individuals
would not be able to live their day-to-day life as they desired without making
use of credit and loan facilities. Loans are often essential when you need to
fund a venture or purchase which would otherwise take you years to save up for.
It is because loans are more of a necessity than an option for most UK residents
that we have created this website designed to educate people about some of the
important things involved in borrowing, providing you with the information you
need to know so that you are fully equipped to find the right loan deal for you.
UK loans are provided by lenders such as banks, building societies and loan
companies and are available in a variety of forms for a range of purposes. When
you take out a loan the lender will charge you a fee for the service they are
providing you and for the risk they taking in putting its funds at your disposal.
The APR (annual percentage rate) represents this charge. Interest will accrue
on the amount of money / capital you have been lent, and you will need to pay
back both the original sum borrowed and the interest on top of it.
The loans UK borrowers will choose depends of course on the purpose or need,
but typically start at £500 and are repayable over a period which can vary
from 6 months to ten years. Generally, the higher the amount borrowed, the lower
the interest rate will be, but rates can vary between about 8% and 20%, with fluctuations
within this range effected by the central bank rate. Personal loans are usually
repayable on a monthly basis at a fixed amount, although today some lenders allow
for some flexibility, permitting the borrower to make under-payments or over-payments
according to their personal circumstances.
This information is of course no more than an overview of the loans UK borrowers
can access and the terms and definition of a given loan will be unique to that
specific loan. Your decisions should be guided by the specifics of the loan in
question.
Read more about the basic components of a loan here.
Read more about the different types of UK loans available here.
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