| At one time, borrowing money from the bank would | | | | lenders all apply penalties when borrowers look to |
| have involved getting out the best suit and grovelling | | | | repay early. Paying the loan early will automatically |
| to the manager.These days, banks ring customers at | | | | trigger a charge of £175. |
| home and ask them if they want to take out a loan. | | | | But the charges don't end there. Complicated small |
| In fact, they almost give you hard time if you're not | | | | print explains that borrowers are tied into the loan |
| borrowing.Just as it's never been easier it's also never | | | | for eight years.Loans can run for as long as 25 years |
| been quicker. You can pick up the phone and arrange | | | | given the amounts involved. But if you want to repay |
| to borrow money as quickly as you could book a | | | | your loan within three years you will have to pay six |
| table at a restaurant.About two-thirds of the way up, | | | | months' worth of interest on the outstanding |
| somewhere between a credit card and a mortgage, | | | | amount.Given that some customers are paying as |
| is the personal loan.A credit card these days means | | | | much as three to four times the going market rate |
| being able to buy that must have dress or CD before | | | | for loans of higher amounts it is estimated that more |
| pay day, but more expensive single expenses, such | | | | than half a million Brits who took out banks loans of |
| as buying a car, paying for a wedding or doing up a | | | | less than £5,000 in the last year are paying too |
| house, it's the personal loan that has taken over.While | | | | much.There may now be a very valid and justified |
| credit card borrowing fell by £300 million in mid | | | | complainant that they're being unfairly hit by this |
| 2006, net lending on personal loans and overdrafts | | | | policy of applying different interest rates depending |
| rose by almost three times the amount seen in June, | | | | on how much is being borrowed. |
| the latest statistics from the British Bankers' | | | | Nonetheless, UK loans do still remain one of the |
| Association (BBA) show.New credit card borrowing | | | | cheapest possible ways for Brits to borrow large |
| reached a four-year low reaching £7 billion, while | | | | sums of money (over £5,000) and so the costs |
| personal loans and overdrafts grew in popularity, up | | | | of funding for small loans (under £5,000) by UK |
| to a net lending of £655 million.Director of | | | | banks should be viewed with caution.Shop around for |
| statistics at BBA, said that despite the decline in | | | | the cheapest personal loan possible is also the advice |
| mortgage lending, other means of borrowing of | | | | of the head of personal finance at uSwitch, who |
| becoming more popular and convenient."Unsecured | | | | notes that interest rates do remain highly |
| lending is displaying quite a different trend, with the | | | | uncompetitive on small loan amounts in the UK.This |
| growth rate continuing to decline, largely reflecting | | | | would appear to be the case regardless of whether |
| the ongoing contraction in credit card borrowing," the | | | | or not the personal loan is secured or unsecured as |
| director said.In April, Moneyfacts said that while credit | | | | UK lenders still apply a tier based system to the |
| card transfers can offer cheaper rates than personal | | | | interest rates they charge. |
| loans, people lacking discipline with their repayments | | | | Alternative borrowing, such as a 0 per cent credit |
| could benefit from the structure a personal loan | | | | card, should also now be included in any alternatives |
| provides.However, new research from uSwitch | | | | you are looking at if you are considering taking out a |
| seems to indicate that the less you borrow on a | | | | small loan in the UK with a very limited repayment |
| personal loan in the UK, the more likely you are to be | | | | period.Alternatively, it may just be the times for Brits |
| paying interest rates that are higher than the lender's | | | | to start thinking of borrowing larger sums of money |
| advertised Annual Percentage Rate (APR).The major | | | | just to help reduce the cost of the borrowing. |