The Availability of Cheap Loans after the Credit Crunch in the Eurozone

I have recently made my market research on the different kinds of financial products and loans today available in the market and on the Internet.
First of all, it is important to remember that there are many types of loans:

• personal loans
• loans offered to employees
• loans for buying a car or a motorbike
• loans for house renovation

and so on.

Why Ask for a Loan Right Now?

The current economic situation, the high cost of living and the price increases in electricity, fuel and basic commodities are absorbing what little purchasing power households had left. As the global economic crisis deepens, indeed, it is very hard to afford luxury, and even basic, expenses. Some years ago, it was easier spending some money to travel, or to buy a new car or to renovate an apartment. Actually, it seems that your salary, that before the credit crunch was just about right, might now be not enough to make ends meet. This is the reason why more and more people seek for loans, just to be able to pay all their expenses. Before asking for a loan, it is necessary to get as much information as possible, to avoid problems in the future.

How Do Loans Work and What Do I Need to Know?

I hope you may find useful this classification I made for you in order to gather all the preliminary information about loans available in today's market:

• Zero Rate Interest Loan: we are surrounded by advertising regarding zero interest rate loan, but it is not always true, and sometimes, when paying the first installment… one bad surprise after another! Before signing a loan agreement, I suggest to read carefully the contract, small clauses included. A real zero interest rate loan must have an AER and an APR equal to 0%. Only in this event, the debtor would return to the creditor exactly the sum received.

• Fixed Rate Loan: this is a loan with an interest rate that is fixed at the signing of the agreement and that would never change in the course of time.

• Floating Rate Interest Loan: in this case the interest of the loan can float, according to the changes of the trend of the market.

• Personal Loan: this is the situation when a bank or a lending institution gives you an amount of money that you would return in an agreed period, with an agreed interest rate. Usually this loan is long term or middle term period structured, divided in monthly instalments charged on your bank account.

As you can see from the table here below, interest rates have gone up quite significantly on personal loans in the last few years.

Source: Guardian News

According to the data comparison presented here above, the APR ("annual percentage rate", also called "effective interest rate"), a term that describes the interest rate for a whole year applied on a loan, has risen significantly in the past few years.

What Are the Most Common Types of Loans?

There are some differences between a personal loan and a loan finalised to the purchase of a car or a motorbike. In the first instance, the monthly instalment depends on the requested amount of money and it depends on the length of the loan. The second type of loan is finalised to the purchase of a specific good or service; furthermore, there is the presence of a third part (the retailer) between the bank and the customer.
Just few words about another type of loans, the small loans, which is becoming increasingly widespread. When it is hard to make ends meet at the end of each month small loans may be the answer. These days there are a large number of companies offering small loans with a value of between £20 and £5,000, but I suggest comparing carefully interest rates and loan periods because the interest rate charged on this type of loan can be quite high.