What Kind of Loans do Banks Offer

Banks remain the most trusted source of lending for most individuals. When a personal loan is required for something major such as a house purchase, buyers know they are taking on a long term commitment and thus prefer to deal with a bank with a solid reputation. When considering a long term loan most people still look for ‘steady’ and ‘reliable’ to fit their needs, even if the traditional image of the suited bank manager has more than likely been replaced by a call centre.

Banks offer many different kinds of loans to individuals, from relatively small unsecured personal loans, to secured loans for higher value spending purposes. A mortgage is usually the biggest financial commitment a person makes and is extended over a long period of time.

Not only does a person need a good credit history to obtain a mortgage, but the better the credit score one has, the better the interest rate offered, which could be a difference of $1000’s over the term of a mortgage. Collateral will be required too, in the form of the house. If the borrower defaults on the payment schedule the bank has the right to repossess the house. It is well worth the borrower checking round first to see which the best mortgage terms on offer are, and to make a decision between a fixed interest rate and a variable one.

Auto loans are another kind of loan offered by banks, and again collateral is needed, this time in the form of the car. The loan will be for a shorter term than a mortgage, as you don’t want to still pay for a car once it is a rusted old heap.Unsecured personal loans are also offered by banks, and do not require collateral. You will probably need to put your case to the bank as to why you need the loan and to negotiate repayment terms. Calling the bank and asking for a loan to head to Las Vegas for a week of gambling will probably result in rejection; whilst a loan for the purpose of consolidating other debts may well be approved, if your credit score is still intact enough to make you eligible for a loan.

The first port of call for a personal business loan is also likely to be the bank, where a clear and professional business plan presented will be considered. Interest rates are likely to vary on analysis of the viability of the business proposition.

Taking any one of these loans is a serious business and the borrower should be aware of the contracted terms he signs. No one should ever look to borrow the maximum available if it means over stretching oneself, as circumstances may change. Penalties will be incurred if the loan is not serviced in the agreed manner or the payments fall into default.

Used wisely though bank loans are a less risky form of borrowing than going elsewhere for the needed funds, but always look round for the best available deals before signing for the first bank loan offered.