Business, Legal & Accounting Glossary
Flexible loans act as drawing accounts on which you may write cheques. Your bank will agree on a credit limit for your flexible loan against which you may borrow and, thereafter, may have as much or as little of the money as you want whenever you want it. Unlike other online loans, with flexible loans, you are only charged interest on your outstanding balance each month.
Standard personal loans prescribe fixed monthly repayments fixed. However, subject to a set minimum amount (for example 3% of the outstanding loan balance or £25 with one bank, 1.75% or £50 with another) payable by direct debit, flexible loans allow you to decide how much you repay each month.
Flexible loans allow you to repay your loan early without incurring any additional charges other than the outstanding balance that is due and sometimes offer further flexibility in that you may make lump sum reductions to the balance of the flexible loan without being charged for doing so.
What flexible loans also offer is the ability to re-borrow money that you have paid back, should you need to do so.
Flexible loans can be suitable for those whose income varies, such as the self-employed, allowing you to pay extra off the balance as and when you please. The benefit to this is that the flexible loan will be repaid earlier, thus saving you a substantial amount of interest.
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This glossary post was last updated: 15th February, 2020 | 6 Views.