One does not need to be a finance guru to have a basic understanding of loans and the normal terms associated with it. Loans form an essential commodity in most of our lives in order to have access to services or things like education, house, and capital for starting businesses, etc. Loans form the primary source of income in terms of interest for a majority of the financial institutions all over the world.
UK Lending Market
The financial fiasco of 2008 is no stranger to the world that saw a major economic crisis in almost every country. Post this mishap, the major international as well as the domestic finance houses have taken a plethora of measures to combat such mishaps. The lending market in the UK has also done its fair share of risk mitigation in recent years.
The recent status of the UK loan market can definitely be termed as good. However, it has also been observed via multiple surveys that the loan consumers are particularly oblivious about the kinds of interest rates they are charged. Such cases have been found especially in areas of unsecured loans.
Major Types of Loans
Conventionally, loans have been divided into two major types:
- Secured
- Non-secured
The UK Loan market witnesses various other kinds of loans as well, which are subsets of these two primary loan types. Some examples include:
- Multiple Mortgages
- Loans for Home Improvement
- Guarantor Loans
- Holiday or Vacation Loans
- Graduate or Student Loans
Issues in UK Loan Consumer Areas
While the lending section of the Loan Market in the UK has enhanced in terms of market sustainability and loan repayments, the consumers are still unaware of the basic loan details like interest rates and all. Even though the loan market has a variety of customized loans and interest rates, the majority of the consumers seem to be completely clueless about their existence.
A recent survey showed that almost 75% of the borrowers do not know the interest rates of their personal loans that are structured. The shocking part is these consumers are not young. They lie in the age limit of 45-64. The survey also shows that such unawareness is more common in women (70%) than in men (50%).
Mitigating the Issue
The condition is not as dire as it seems. With the age of the internet, the trend of comparing various types of loans online has been rising. One of the best places to compare such loans is at usave.co.uk – compare loans. While in the recent past, borrowers usually settled for convenient products rather than cheaper ones, the recent course is towards proper research on multiple finance sites before actually settling for one.
The lender should also play a role in helping their potential clients to choose the right product rather than conventional ones. With the dual responsibility of the lenders and borrowers, the UK loan market will definitely see a sustainable yet thriving economy in the nation.