Borrow up to £995
Rates from 278% to 1576%
3-12 month repayment
From £1,000 to £25,000
Rates from 4.7% to 278%
3-36 month repayment
Representative Example: Borrow £700 and pay £111.27 per month for 12 months at an interest rate of 140% per annum (fixed).
The total charge for credit is £635.24 The total amount repayable is £1335.24. Representative 277.5% APR (variable). Your APR rate will be based on your circumstances.
† Not all loan types and amounts are eligible for 20 minute payouts. Your chosen bank may increase the time you receive the funds.
Bank Loans: What they are, how they work, and the alternatives
Ever wondered what banks loans are and what you need to do to secure them? If you are, then we may be able to provide you with some answers. Now, no bank is the same when it comes to processing loans but there are some common features that are widely present in every bank loan in the UK and below we will discuss all of them and some more.
Applying for bank loans in the UK
First things first, if you want to obtain banks loans, you will need to complete an application form. Depending on the bank, you may be able to apply online, through the phone, or directly in any of its physical branches.
So you won’t waste your time and energy, be sure that you know what the basic borrowing criteria are. Generally speaking, the requirements for bank loans include:
- Have a valid account on the bank that you are applying for
- At the legal borrowing age of 18 or older
- A legal resident of the United Kingdom
- Have an income that satisfies the minimum requirements e.g. £25,000 per year
Credit history as an important criterion in Bank Loans
One of the most important factors that banks look into in their lending decision is credit history. Typically, the better your credit history the higher your chances of getting approved and for better interest rates and terms. You have the freedom to decide on the amount of loan that you want to take out whether it’s £1,000 or £25,000 and for how long you will have to pay it back whether a year or 7 years.
Interest rates and repayment schedules
Once you have submitted your application, the bank will then go over all the information that you have provided. If you meet the requirements and your application becomes approved, the bank will offer you a credit agreement with a corresponding interest rate. While every bank will advertise a representative interest rate in their site, you may or may not be eligible for that interest rate.
After you have determined the interest rate that you are eligible for, the best thing to do would be to use a loan calculator (they are often provided for free in the bank’s website) to ensure that the loan is something that you can afford and is suitable to your present circumstances.
Traditional bank loans generally have fixed monthly payment terms which make it easy for you to calculate whether it is something that can be plugged in comfortably to your budget. If there are no more questions and concerns about your loan deal, simply sign the contract and the bank will send you the money in whole.
The different types of bank loans in the UK
There are numerous types of bank loans in the UK and the kind of option you choose will depend entirely in your present needs and circumstances and your qualifications as well. Generally however, they can either be unsecured or secured bank loans.
- Unsecured Bank Loans. The bank loans, also known as personal loans, do not require any form of collateral as security making the financial products quite risky to banks. For this reason, unsecured bank loans are normally more expensive than their secured counterparts.
- Secured Banks Loans. The type of banks loans is secured on an asset like a property or vehicle. With collateral in place, there is minimal risk in the part of banks making it easier for them to grant you lower interest rates. However, the risk is shifted on you as the borrower as you can have that asset repossessed if you fail to pay back the money that you borrowed.
Simply put, there are plenty of bank loans that you can consider and the decision is yours in which option you choose. The best approach would be to shop around and compare different offers from as many banks as you can find to ensure that you find the right deal for the best price.
Paying off your bank loan
Majority of bank loans in the UK follow instalment payments which means you will be required to pay a portion of the entire money that you borrowed every other month until you have cleared of your entire debt including the attached interest rates.
One strategy that you can use to lessen the monthly repayments is to pay off your loan in advance so you will save more on interest rate payments. However, not all banks allow this kind of payment feature and there are those that do allow them but for a certain fee. With that being said, be sure to carefully go through the terms and conditions of your loan so you will know whether or not you can make advanced payments on the principal amount of your loan without any charge. You can also personally ask your bank this question if it’s something that suits you better.
Faster and easier alternatives to Bank Loans
One of the main drawbacks of banks loans is that they are quite difficult to obtain for an ordinary borrower. The eligibility requirements are quite stringent and applicants with poor credit histories simply don’t stand a chance. The turnaround time, from application towards loan payout, is also pretty slow and may not be fast enough to cater your need for funding if you are in an emergency situation.
Fortunately, there are quicker and more accessible alternatives that you can consider and they can easily be found online. And even if you have been rejected from numerous different banks loans because of your blemished credit history, you can still enjoy reliable funding from:
- Guarantor Loans
- Logbook Loans
- Doorstep Loans
- Payday Loans
As mentioned earlier, these loans are available online and there is a constellation of reputable lenders that offer them. What’s more, you can easily find a loan deal that should perfectly suit your present needs and circumstances. And once you are approved, the money that you requested for should be ready for use way faster than traditional bank loans.