Loans are one of the main ways people can borrow money in the UK. Bank and building society loans are the most common in the UK, whereby the consumer will agree with the lender how much is going to be borrowed and over what period. Many people still go in to their local bank or building society for the loan however it does now pay to look around, particularly with the ease at which the internet now allows you to do this.

Typical loans will be any sum up to £25,000 to be paid back over a period of between six months and ten years, with the sum being paid back in monthly instalments. In general, the larger the amount that you borrow, the lower the interest rate to be paid back will be.

However, it should be remembered that many financial providers will often stipulate that the interest will have to be paid over the life of the loan. This means that if you take a five year loan and pay it off in three, you may still have to pay the equivalent interest for the last two years, though if you request an early settlement figure from the loan provider they will often reduce the sum owing slightly which can amount to a number of month's interest.

It is worth thinking carefully about the APR, the repayment period. and picking a lender which has low or zero redemption fees.