This section provides information on loans in the UK.
If you borrow money, such as
short term loans , it is important that you borrow only what you will be able to repay.
In the UK there are different ways that you can borrow money if you need it, including:
- bank overdrafts
- personal loans
- credit cards, store cards and in-store finance
- borrowing from banks and building societies
If you are unable to borrow money by these ways there are other lenders that may be willing to lend money to you, however they are often very expensive, these may include sub-prime lenders and doorstep lenders.
Sub-prime lenders
Sub-prime lenders are licensed lenders that give loans to people who are unable to get credit from mainstream lenders because of a poor credit record. They often charge a much higher rate of interest than banks and building societies.
Doorstep (or 'home credit') lenders
Doorstep lenders (salespeople who come and knock on your door) give loans, but can be expensive. If you consider taking out a loan from them, you should:
- ask to see their lender's licence or other authorisation. If they don't have one, they are operating illegally
- be clear about the amount you are borrowing, how much you must repay and for how long you will be making repayments
- ask how much in total the loan is going to cost you
- make sure you understand what will happen if you can't keep up the repayments
There are also unlicensed lenders, who you should avoid such as loan sharks.
Loan sharks
Loan sharks are unlicensed lenders. They operate illegally and will lend you money, but:
- their rates will be very high and you may find it difficult to keep up the repayments
- you may be forced to get a second loan to pay off the first, increasing your debt
- they may use violence or intimidation to collect debts
For more information on borrowing money, visit the websites below:
