Loans

A loan is an amount of money you borrow from your bank, usually over a fixed period of time, which is repaid at regular intervals. Interest is charged and added to the original loan amount, and other charges, such as an Administration Fee, may apply to the loan as well. You need to check out the Annual Percentage Rate to find out how much your loan is really costing you.

There are several different types of loan and you should be aware of the differences before deciding which is best for you.

Unsecured Loan: This type of loan is granted without any security. (Most credit cards and personal loans will be unsecured).

Secured Loan: A secured loan is guaranteed against other assets that you have. The bank takes a formal charge over an asset you own. This means that if you fail to make loan payments on time then the asset may have to be sold as payment.

Flat Rate Loan: The amount of interest charged is calculated at the beginning of the loan. The repayments will stay the same for the life of the loan.

Base Related Loan: The amount of interest charged is calculated each day. The rate of interest charged can go up or down if the Bank changes its Base Rate, so the amount of your repayments could change.

It is often possible to protect your loan repayments with Payment Protection Insurance.

All bank loans are regulated by the Consumer Credit Act. This means strict procedures are carried out and provides you with protection from unscrupulous lenders. You must be given information about a loan before you sign a Loan Agreement.

Before deciding whether to grant a loan the bank will check out your credit worthiness to satisfy your ability to repay any money you borrow.

More information on NatWest loans.