What are specific features of different kinds of loans in the UK?

A loan is money lent on condition that interest will be paid at an agreed rate and that the amount lent will be repaid at an agreed time or in an agreed manner. There exist many types of loans in UK economy and each of them has its specific features.

Such loans as balloon and bullet are repaid irregularly. The balloon loan is a loan where the repayments are unevenly distributed throughout the life of the loan. The borrowers usually make larger repayments as soon as they have got a possibility to return money; the larger repayments are known as the “balloons”. When the borrower pays only interest during the life of the loan and then repays all the principal as the final repayment, the loan is called a bullet loan.

There exist loans on mortgage of property. You will pay only interest during the period of the flat loan, the amount borrowed being repaid at the end of the period in cash or by arranging another loan. The table loan is repaid by regular monthly installments, and each consists partly of interest and partly of some of the amount borrowed. Thus at the end of the period of the loan all the interest and the whole of the amount borrowed will have been paid off. (A building society can make the interest-only-loan to a retired person who pays only interest, leaving the principal to be repaid when the owner sells the house or when he dies).

A bank can lend money to a private person (personal loan) for the purpose of personal expenditure, such as payment of household bills or for buying consumption goods such as a motor car, boat, furniture, etc. Such loans are usually repayable by installments in less than two years and are often made without security; the rate is therefore high.

The hard and the soft loan is made by one country to another on condition that the borrower repays it in the lender’s currency (the hard loan) or the borrower’s currency (the soft loan).

What conditions should be taken into account when taking/ making a loan?

When you apply for a loan, banks judge your ability to repay the loan on numerous counts including your age, income, job stability and your credit report, which is a reflection of your true credit worth. You need to understand why this is the case so that you prepare yourself to submit a good application and ensure a strong credit profile which will help you obtain your loan without any hassles!

Date: 2015-12-18; view: 951