There may be more forms of loan that exist than you realise, as well as numerous providers. Gone are the days where loans could only be taken out with a high street bank, although this now means that customers need be careful about whom they borrow money from, and what the agreement actually entails. There are high interest loans from companies referred to as ‘payday lenders’ as well as the more traditional forms you may be familiar with.
To help you understand the various types of loans available a bit better, here are five ‘sensible’ reasons that you may want to take one out in the future:
Purchase a house
A mortgage is one of the most common forms of loan, and is available from banks and building societies. This loan has variable rates depending on the offer made, and this is decided from a number of factors. Just some of these include credit rating, amount to be borrowed, the length of the loan, and so on. People take out a mortgage so they can buy a house, whether it is their first, or one that they want to ‘buy-to-let’.
There are special types of loans that can be taken out for home improvements, which are generally ‘unsecured’ loans. This can be helpful for many people who have jobs to do around the home, such as fitting a new kitchen or replacing an old boiler. 39 percent of Britons plan to make home improvements in the next 12 months, which is why these loans are popular with homeowners. Peer to peer loans are also often given for home improvements.
Buy a car
Another expensive purchase that people make is on a car, whether it is a run-around or a luxury vehicle. There are often finance agreements that can be taken out when buying a car, however some people like to take out a loan if they can get a lower rate. If this is something you are interested in, you can find out more detail by doing some research online. Sometimes car dealerships offer financing options, but it might be the case that you speak to your bank or building society to see if they offer more competitive rates, as well as looking at options such as peer to peer loans.
When it comes to education, there are special types of loan available depending on personal circumstances. For university education, these loans are not usually payable until the graduate begins earning a certain amount of money through their salary. The current figures can be found online if you are looking to start a degree in the following weeks, months or years.
Finally, people may also want to take out loan if they want to pay off some other pre-existing debts. For example someone could look into a Zopa loan for debt consolidation which could be an option for those who are currently paying credit card companies over 16 percent in interest. By consolidating all of the outstanding debts into one place, it can be easier from an administration point of view, as well as potentially achieving a lower rate of interest, and a faster way to be debt-free.