Bank Ordinary Loans

Where from? Banks.

How they work You arrange to borrow a set amount which is then paid into your current account. You then use the money as and when you like. You repay regular amounts into a separate loan account. Interest is variable.

You negotiate the loan individually with your bank manager, so terms may differ from customer to customer. You may be able to borrow more than with other types of loan and for as long as ten years.

Points to note These are very much the Cinderellas among bank loans - they tend not to be advertised and you might be encouraged to take out a personal loan instead. Ordinary loans aren't always available and you're unlikely to get one unless you're an existing customer of the bank. You may have to pay an arrangement fee and the bank might require security - against your home, say.

Verdict Good if you can get them. A flexible and often cheap way of borrowing whether for short-, medium- or fairly long-term purposes for example, to buy an annual season ticket, a new car, or to pay for home improvements.


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Other Types of Borrowing

There is a huge range of loans and credit available, many of which are aggressively promoted. Don't be dazzled by the first deal that's thrust upon you. If you shop around, you'll find some deals are much better than others, and some should be avoided altogether.

Overdrafts

Where from? Banks, some building societies.

How they work You run a deficit on your current account by spending more than you've got - in other words, you go into the red. It can be a convenient way of borrowing. But it can be expensive: if you don't arrange the overdraft in advance you'll often be... see: Other Types of Borrowing


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