If you are short of funds, you can approach a commercial bank for a loan. You can get a loan for buying a house, household items, a car or consolidating your debts such as credit card loans so as to manage the monthly repayment of various loans from one source.

Commercial banks in the UK offer different types of loans to their customers. Loans are based on Sterling currency. The interest rates charged on the loans are linked to the rates charged by Bank of England or LIBOR (London Inter Bank Offered Rate).

As already stated you can approach a commercial bank for a loan. The financial experts will guide you on the loan that best suits your needs. However, a little bit of groundwork can ensure you get the best possible deal. You should study the types of loans offered by various commercial banks, the rates of interest, administrative charges and other terms and conditions. This can be easily done through ‘loan shopping’ or by checking the website of each commercial bank.

While the UK based commercial banks offer loans in Sterling, other foreign and European banks in the country offer loans in their own currencies. Foreign currency loans are more suitable for individuals who have business interests in foreign countries as they would not have to pay exchange rates if they have to change British pounds in foreign currency.

The commercial banks in the UK offer the following types of loans:

Secured loans

Secured loans, as the name suggests, are loans that are secured by the assets of the borrowers. In most cases the assets pledged are homes. The lending bank acquires a legal right over the property. It can sell the asset to cover the loan if the borrower defaults on paying it. Secured loans are beneficial for the borrower as well. As a borrower you can get a higher amount loan to be repaid on a longer period of time. The interest rates are lower than those on unsecured loans.

Unsecured loans

Unsecured loans by their nature are usually for smaller amounts. They are suitable for those who do not have any asset to offer as security. They carry higher rates of interest and are offered only for shorter terms.

Mortgage loans

Mortgage loans are probably the most popular type of loan in the UK. A mortgage loan is a secured loan and usually it is the borrower’s house that is mortgaged. The bank takes a legal charge over the house. Mortgage loans are available for longer terms and lower rates of interest.