What Loan Options Are Out There?


Are you looking to borrow money for something important?

With so many different types of loans, at varying interest and repayment levels, finding one that suits your financial situation can be daunting.

The loan that is best for you will depend on how much you want to borrow, your credit rating and how quickly you will be in a position to pay it back.


To help you see the wood from the trees, here is a beginner’s guide to all of the loans on offer, and their advantages and disadvantages. Hopefully it will help you make the right decision for you. 

Credit Cards 

Provided you have a good credit history and a reliable income, a credit card can be a cheap and easy way to borrow money. Many of the major banks and credit card providers will offer an introductory period at 0% interest on purchases and/or balance transfers. Be careful, though. After this initial period, interest rates will jump north of 15%, and hefty late charges will be applied if you miss a minimum payment. 

Bank Loan 

Banks offer large loans for longer periods of time to customers with a solid credit rating. They are the best option for larger loans as they offer interest rates as low as 6%, and they give you a lot longer to pay the loan back. Unfortunately, since the credit crunch, it has become very difficult to borrow money from the bank. In order to be accepted, you’ll often have to provide a cast iron guarantor.


A mortgage is likely to be the largest loan you ever take on. It is a loan you take out to finance the purchase of a house or property. Mortgages are the only way a majority of the population are able to own homes. They run for variable terms, but traditionally they’ll last 25 years.

There are two main types of mortgage – fixed rate, where the interest remains the same, or variable rate, where the interest rate varies with the Bank of England rate.

Mortgages are high stakes loans. They are only awarded with the house itself as collateral. There is a lot to lose if you default on payments, so don’t enter into one lightly!


An overdraft is linked to a bank account, and can be arranged through your bank or building society. An arranged overdraft allows you to continue to spend even after your account has reached zero.

If you stay within the arranged limits of your overdraft, you’ll often be offered the loan interest free. This means that you’ll have the peace of mind of knowing that even if you spend a little more than you have, you’ll not get charged.

But if you go beyond those limits, or become overdrawn without an arranged overdraft, you’ll be subject to crippling charges. Typically, you’d be charged around £1 per day on an unarranged overdraft.

Payday Loans 

Payday loans, as the name suggests, are designed to give you just enough money to tide you over until the next payday. They can be a lifesaver if you have been caught short one month and need a small cash injection to cover the groceries, for example.

You’ll find this type of loan from a payday loans direct lender, rather than a bank, and due to the risky nature of the business, they often charge high interest rates. While payday loans can be a useful cushion, be warned against falling into a cycle of borrowing and debt that could spiral out of control. Always try and stay on top of your borrowing.

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James is a financial expert who has contributed several business and finance related articles. His expertise and first-hand knowledge of economics makes his blogs and articles informative and helpful for those looking out for guidance and assistance in matters related to finance. He has an active schedule of TV and radio interviews He is co-host of the popular VT Radio show Jim and Gordie Show. latest-articles-buttonJim comes from an old military family dating back to the American Revolution. Dozens of Confederate ancestors fought for the South in the War Between the States. Uncles fought in WWII and Korea. His father was a WWII P-40 and later P-51 Mustang fighter pilot. Vietnam found several uncles serving, a cousin, and brother Wendell as a young Ranger officer. His mother was a WWII widow at 16, her first husband killed with all 580 aboard when the SS Paul Hamilton, an ammunition ship with 7000 tons of explosives aboard, was torpedoed off the coast of Algiers. He has been writing, speaking and doing public relations, television, consulting and now multimedia work for a variety of American heritage, historical, military, veterans and Intel platforms. Jim’s only film appearance was in the PBS Looking for Lincoln documentary with Prof. Henry Lewis Gates, and he has guest lectured at the Army Command and General Staff School at Fort Gordon. Currently he is working to take his extensive historical video archives on line to assist his affiliated organizations with their website multimedia efforts, such as the Military Order of World Wars, Atlanta, Sons of the American Revolution, Sons of Confederate Veterans , Assoc. for Intelligence Officers, the Navy League, Georgia Heritage Council, National Memorial Assoc.of Georgia.

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