What kinds of loan company can I find?

Loan providers come in all sorts of shapes and sizes. They also provide all sorts of loan products. You can get personal loans for amounts as small as £300, to amounts in the millions. But it's worth taking a closer look at the type of company from which you can borrow money. The more you know about them, the better and more appropriate your choice should be.

First, we start with the banks. It wasn't so long ago that probably the only place you could go for a personal loan was the bank. At least this is true when talking about legal personal loans. People used to talk about their bank manager with reverence, and have to go in and basically beg to be loaned any money. The monopoly of the banks meant that they could charge high interest on their loans. This is not the case anymore. Ultimately - you should get loans off people you trust, and the high street banks should theoretically be the most trustworthy. However, that doesn't go as far as trusting them to give you the best deal. You should thus shop around before accepting their offer.

Then there are the building societies. Nationwide and the likes of Skipton building societies are different from banks in their ownership structure, in that they are owned by those who have deposited money within them, and those with mortgages from them. They may give you a better deal on a loan, mainly because they are run for the benefit of their customers and thus do not have to pay dividends to shareholders. They come in many shapes and sizes, but are generally pretty reliable.

The problem with banks and building societies is that in order for them to be reliable, they need to be able to rely on those they lend money to. Thus, they will check quite hard on your credit history and current credit score to make sure that you are likely to safely repay the money they have lent you with interest. Thus, quite often people get turned down for loans, even if they don't have any bad credit, maybe because for example they have changed jobs often.

This is where sub-prime lenders come in. You'll have heard of them. They advertise on TV. Carol Vorderman anyone? These companies offer debt consolidation loans, or simply loans that are easy to obtain, whatever your circumstances or credit score. In return, they will charge you a hefty rate of interest, so be careful.

Finally, there are loan sharks. They advertise a lot in the back of the tabloids. We advise you to avoid unless absolutely desperate and with no other option. You'll pay dearly for their help.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

© AskFinancially.com 2008

Loans

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