Loans

What type of loan should I choose?

The type of loan you choose generally depends on two factors:

• the reason for the loan
• your financial circumstances.

Most people who borrow money have a good reason for doing so, and most banks are sympathetic to their customers' needs. Common reasons for borrowing include:

Buying a car

Expensive purchase

Holiday

Paying off a debt

Clothes

When you need to take out a loan remember that you will have to pay it back. Choose the loan carefully and keep in mind that there is a risk you might not be able to pay all the money back within the time.

If you need advise about taking out a loan, you can talk to an IFA (Independent Financial Adviser) or investment adviser. All advisers are paid for giving you advise about a financial product. This means that they might be interested in recommending one product more than another one, just remember this when you consult an IFA.

Thanks to the Financial Services Act, all advisers have to declare any commission or fees they'll get. So you'll be able to consider this as and when it comes up (i.e. before you sign anything look for this statement and ask them about it).

Firms lending money to customers must be licensed by the Office of Fair Trading (OFT) under The Consumer Credit Act 1974. The Act requires certain credit and hire agreements to be set out in a particular way and to contain certain information.

For useful tips on borrowing see the Consumer Direct website

• Consumer Direct [http://www.consumerdirect.gov.uk/before_you_buy/think_of/borrowing-money]
Useful tips on borrowing