An Overview Of The Types Of Loans Available

A loan is a sum of money or other variable that an individual or a company borrows from another individual or a company with the condition of repaying it with time. Often the loan amount has to be repaid with a sum of interest rate that marks as a security for the lender of the loan. Loans are required by those who do not have the financial affordability to purchase something with their own money. The financial institutions help such people by legally financing their purchase and helping them realize their dream. Thus it is a financial aid that is immediately provided to the people with monetary need to help them buy a property or a car or any other thing. If you’re a resident of the UK and you want to know about the various kinds of loans available in the UK, this article may help you out.

The types of loans in the UK

Bad credit loans: Today’s credit lending industry, throughout the world is based on the credit of a person. As there are huge numbers of defaults throughout the UK, the lenders first test your extent of credibility by verifying your credit score before lending you a loan. Have you ever thought how a person with poor credit score would get approved for a loan? Well, the bad credit loans would perhaps help them out. Getting a bad credit loan is ideal when you want to raise a lump sum amount of money and you do not have a high credit score. These loans will be lent to you without checking your credit score but you need to have equity in your home in order to obtain such loans. This will be used as collateral so that the lenders can sell it off in case you default on your loans.
Bridging loan: A bridging loan, as the name suggests, is a type of loan that is used to bridge the gap between a particular purchase and sale. For instance you’re selling off your old house and buying a new property. You can take out a bridging loan that is usually a short-term loan to buy the new property. You’re liable to repay the loan as soon as you get the proceeds from selling off your old property. The commercial or residential property is usually used as collateral for getting such a loan.
Car loans: Car loans are simply taken out by a prospective car-buyer who needs a lump sum amount of money to purchase it. There are two types of loans that you can obtain on a car, like the secured and the unsecured ones. If you take out a secured car loan using collateral, you’ll get to pay low interest rates on the loan. Repayments will be made easier by this kind of loan and it will suit your financial needs. On the other hand, an unsecured loan carries a higher interest rate as there is no collateral in this loan.
Home loans: Home loans are taken out by prospective home buyers to purchase a home and soon get you out of your rented property. It will help you purchase a home of your own and build up your home equity as soon as you start making repayments on it. Getting a loan requires having a good credit score as the lenders usually demand a highly creditworthy person who has no chances of defaulting on the loan.
Thus, if you have been looking for information on the types of UK loans, you must have known what they are by going through the concerns of this article. Consider the above mentioned loans and weigh their benefits before taking them so that you can take a wise decision while seeking financial assistance.