A mortgage is probably the most popular and common loan in the UK. This is the money that you borrow from a bank or building society to cover the costs of a home purchase. These loans are often so large, that they require a deposit from the person taking out the loan. A down-payment shows your lender that you can be trusted to save money carefully.
When you take out a mortgage, you’re often expected to pay back a small portion of the cost of the loan, alongside the cost of interest once a month for between 20 and 40 years. Depending on your preferences, mortgages can be offered on a flexible, or fixed-term basis.
For most people, an overdraft is seen more as a safety blanket than a loan. Essentially, it’s something that you get attached to your current account, so that you can continue to spend money even if you haven’t got your wages yet, or you’re a little behind on your bills. Overdrafts come with a limit, so you probably won’t be able to spend a lot of money with them, but they can be a great thing to have in place if you’re concerned about overspending.
When you pay money back into your current account, you automatically pay off your overdraft and any interest that you owe!
In the UK, student loans can work differently to most standard loans. The purpose of a student loan is to provide an academically-minded individual with the money they need to pursue a degree. The loan needs to be paid back only once the graduate earns a certain thresh-hold for income in their career. If you don’t get that income within thirty years, then the money you owe can be written off.
Student loans can also be extended to include “career development” loans that offer support for post-graduate and professional courses. Repayments for these loans don’t start until the course ends, but you’ll have to start paying the money back as soon as you earn your degree.
Short-term loans are payday loans that you only access for a very short amount of time. For instance, a type of short-term loan could be a no credit check payday loan, although it’s recommended that people address these lending options with caution as they can come with high interest rates. Short-term loans are designed to help people make payments or buy something when they know that they’re going to have the money to pay back what they owe within a couple of months or weeks.
As with any kind of loan, a short-term loan must be repaid on time and in-full, on the day that you agree to with your provider. Generally, because interest rates for short-term loans can be high, it’s a good idea to set a direct debit up to make sure payments are made.
A personal loan is a kind of lending vehicle that doesn’t necessarily come with a defined purpose. Unlike with a car loan or mortgage where the individual needs to purchase something specific with the money they get, a personal loan is money that you can use for anything from home improvement projects, to a wedding or party.
Personal loans usually aren’t very large, and though you will need to make monthly repayments, one of the good things about these loans is that the terms can be quite long depending on which lender you choose.
Credit cards are lines of credit offered by banks, whereas store cards provide customers with credit to spend within a specific store. These cards can be used to buy the things you want or need, then you simply pay back the money owed at the end of the month, once you’ve received a bill from the provider. If you make the repayments for your credit cards on time, then you shouldn’t have to pay any interest. Additionally, some credit cards come with 0% introductory periods, so you can avoid making repayments for a while,