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Which payday loan is best for
people with bad credit?

Which payday loan is best for people with bad credit?

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Bank Loans: Its ideal uses, features, and advantages and disadvantages

When you find yourself strapped of cash and unable to budget for an important expense, obtaining bank loans could be the solution to your financial problem. Most people in the UK favour bank loans over other forms of financing mainly because they provide easier to budget payment terms and comparatively low interest rates.

However, just like other forms of credit, loans from banks still have their own set of disadvantages that can be a big deal for any borrower depending on his or her present needs and circumstances. While bank loans can certainly provide solutions to different financial needs, it would be wise to put into equation what its ideal uses are as well as its features and potential benefits and drawbacks so you can make the best decision.

why choose bank loans

Ideal uses for bank loans

Banks loans are the perfect forms of financing particularly if you are someone who is looking for an adequate amount of funding to cover major expenses and have a strong credit rating. Ideally, the financial products are perfect for:

  • Purchasing assets like vehicles, electronic appliances, and properties
  • Financing a new business or growing one
  • Covering vital expenses like major home repairs and improvements

The interest rates and payment terms of bank loans will differ from one bank to the next and will be based primarily on your credit worthiness. The more credit worthy you are, the more favourable your bank loan will be in general.

Features of Bank Loans

Bank loans have a set of features that make it similar to other forms of financing and unique to others as well. Some of the characteristics of the financial products that you can expect include:

  1. Term Loans – Bank loans have payment terms that are either short-term, medium-term, or long-term depending on the amount that you take out and your present financial circumstances as well. If you take out large amounts of loans like £25,000 or more for instance, the payment terms can be long from 10 years or longer. Banks also tailor payment terms depending on the present monthly earnings and outgoings of borrowers.


  1. Secured or unsecured forms of financing – Bank loans can either be secured or unsecured. Secured loans require collateral while unsecured ones don’t but they will need a strong credit rating from the borrower.


  1. Fixed or variable interest rates – The interest rates for the loans can either be fixed or variable. If it’s fixed, it will stay the same throughout the duration of your loan. If it’s variable, it will change depending on certain economic factors.

Advantages of Banks Loans

There are three distinct advantages of bank loans that you ought to be aware of and they include:

1.) Ideal for covering major expenses

When you want to purchase a new car, make a large deposit for a property, or cover other major costs and expenses, bank loans are the ideal financial products that you can consider. Only a handful of us in the UK have enough money set aside for large purchases and if you need to settle in on a new home with your wife or add a new room to your existing home for your children, you will need the help of the bank to secure the necessary funding.

Or perhaps you have numerous costly debts that you need to consolidate? And because unsecured bank loans are basically personal loans, you can use them in any legal purpose you see fit whether it’s for an important purchase or to simply cover the costs for a vacation trip oversees.

2.) Provides favourable rates

Another advantage with banks loans that make them appealing choices to numerous Britons in the UK is their comparatively low interest rates. They are simply cheaper than other forms of funding from credit cards to payday loans and cash advances.

It’s easy to obtain extra cash through credit cards but there are hefty fees that you need to deal with to obtain the funding that you are looking for. And aside from the extra charges, credit card providers generally levy higher interest rates on cash withdrawals than on credit card purchases.

Payday loans are attractive options if you are in an emergency situation and require instant funding without much restrictions and delays. The interest rates for the financial products however, are higher than bank loans and they can become extremely expensive if you miss paying back the money that you owe on the agreed deadline because of the possible fees and penalties that you will incur.

3.) Easier to pay back

When you rely on bank loans to cover major expenses, paying back the considerably large amount of money that you owe to the bank is easier than most types of loans and credit products. Mortgage loans for instance, generally have extremely long payment terms from 10 years to 25 years. Auto loans don’t have the same extensive payment period but you will still have enough years to pay back the money that you owe to purchase your new car.

Disadvantages of Bank Loans

Now we highlight a few of the drawbacks of bank loans that you might want to bear in mind when you’re considering taking out the financial products and they include:

1.) You risk losing one of your assets

If you want to secure large amounts of credit or have a less than stellar credit rating, banks will usually require you to secure the loan agreement with a high value asset that will serve as collateral. The collateral could be your home or vehicle and in the event that you default from your loan, you could potentially risk losing such a valuable asset as the bank has the legal authority to seize and sell it to recoup the money that you still owe them.

3.) You risk damaging your credit rating

Bank loans have the power to tarnish your credit rating especially if you take out huge amounts of credit or cover only the minimum repayments. Conversely however, the financial products can also be an effective means to improve your credit rating so long as you borrow only what you can afford or stick to your payments on the agreed terms and conditions.

why get bank loans



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Struggling Employees

Employees are the drivers of the global economy. They comprise a large percentage of the workforce, and the world will stop without them. If you’re going to analyze deeply, you’ll realize that all of us are employees. We are working for someone else – be it a boss, an organization, or a contractor. Employees are good demographic points because they tend to experience financial troubles more often. It could be that employees are also parents, or they need quick cash to survive until the next payday. In fact, the borrowing habits of employees empowered payday loans (that’s why they called ‘payday’). Employee-centric payday loans don’t have much difference from the cash advance programs of the past, though some lenders have made adjustments. Employee payday loans probably have a smaller interest rate stretched over a manageable repayment period. Lenders can also work hand in hand with employers to increase awareness for employees.

Freelancers on A Budget

The global freelancing community is starting to gain important traction this 2017. In fact, thousands of people are now resorting to freelancing because of the awaiting opportunities in the market. Freelancers are like hunters – they’re actively chasing big game, occasionally hitting and, oftentimes, failing. New payday lenders have understood the need for freelancer-specific loans, though only a few of them are following suit. Perhaps freelancing still needs to be recognized as a tangible income source in the payday lending arena. Another angle is the way people are tagging themselves as ‘freelancers’ even though they don’t have any jobs or income sources. This is why some lenders will look for additional income proofs whenever they encounter freelancers applying for payday loans. Nevertheless, we’re going to see lots of payday loans geared towards freelancers on a budget this year.

Startup Entrepreneurs

Being an entrepreneur today is no longer a side path – it’s necessary for the betterment of your life someday. Once you have a winning idea and transformed it into a plan, you can focus on acquiring capital. If your startup business is not that big, you can settle for a payday loan. Payday lenders can release your money in just minutes. They won’t care about your credit rating or the nature of your business (somehow). What they want to know is if you’re capable of repaying the loan within the agreed time frame. Once you got your payday loan, your business operation can be ignited and you’ll start raking profits in no time. Just remember to allow some of those profits towards your loan repayment. An unpaid payday loan can bring too much stress.


You may think that big-time investors are going after large, bank-issued loans. Well, you’re right. A stock investor, for example, needs big loans if he wants to participate in a growing market. The same can be said for antique collectors and coin enthusiasts. However, we can’t deny the fact that investors also start small. In this sense, small-time investors can use payday loans to fund their investments. Whether they make a killing or not, investors can see potential attention from new payday lending companies.

Once you understand all of these demographic points, you’ll know how lenders are adjusting their operations strategically. At one point, they may pursue better marketing efforts while compromising other areas. Despite this, it’s still important to find a lender that attains a great form of balance among all of these demographic areas.

5 most recent personal loan reviews

Review of H&T Finance

So friendly and so easy to be accepted. I needed a loan to help out a family member and I've been able to do so, so quickly. Daniel at H&T was so polite and helped me understand everything thoroughly.

Review posted by Aimee Walls, Carlisle

  • Customer Service
  • Flexibility
  • Ease Of Use
  • Value For Money

Review of Post Office Money

Post Office, thank you so much! I will definitely be recommending you for your helpful and professional support, from receiving my completed application you were very quick in processing my application. I applied in one day and by the second had my loan. You gave clarity when needed and made me feel that I was not just a number. Thanks again.

Review posted by Lisa Davies, Sunderland

  • Customer Service
  • Flexibility
  • Ease Of Use
  • Value For Money

Review of Street UK

My experience with this great team has been superb, I've had five star quality service since day one and my application processed rapidly, there is no messing about and they provide real fast and strong customer service which I am happy about, I know where to come next time, thanks for all your help.

Review posted by Joe Irving, Leeds

  • Customer Service
  • Flexibility
  • Ease Of Use
  • Value For Money
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