Banks and building societies can provide a variety of loans for both new and existing customers. The most common sort of loan is the overdraft facility that many current accounts have, almost as a matter of course.
We have put together a guide to explain what a loan is and the different types of loans on offer.
Please note, as well as loans offered by banking organisations there are also specialist organisations offering loans to individuals who might not qualify for a bank or building society loan. Always read the small-print very carefully and question anything that is unclear before signing a loan agreement.
What is a loan?
- Money that an institution (banks and building societies in this case) forwards to an individual or group of individuals or a company with the understanding that it will be paid off at some (usually specified in advance) future date.
- Most loans will involve multiple payments, for example, monthly instalments.
- There is interest to be paid on this money, at varying rates.
Who can take out a loan?
Almost any individual can find an organization to give them a loan. The banks and building societies, however, tend to be more particular with who they loan to, preferring to keep their risks low and lending to individuals who easily qualify for the loan, for example, their existing customers.
Typically those with the following may find the banks and building societies unforthcoming:
- Poor credit history
- History of not making repayments when they have been previously agreed
- County court judgements against them
- Convicted fraudsters
Types of Loans available from banks and building societies include:
- Flexible Loans – Often for loans in excess of GBP 5 000, where the repayment terms are chosen by the customer.
- Internet Banking Loans – Where the amount borrowed can go up to figures of GBP 25 000?
- Formal Loans of up to GBP 50 000
- Bridging loans – When an individual wants to buy a property and they have not yet sold the existing one. The loan is for the price of the new house and is at a higher rate than a mortgage but a lower rate than a standard loan.
- Graduate and Further Education Loans – Usually at a good rate to help recently those recently graduated or continuing their studies.
- Professional Trainee Loans, for example, to trainee solicitors
- College or MBA loans
- Loans for Specific Items – such as a car
- target= www.natwest.co.uk