Category: Starting a Successful Small Business >> All about Bank Loan & Interest Rates

Bank Loan Interest Rates


The bank interest rate is the fee that is paid on the money you borrow. The quantity of loaned is the “principal” and the part of the principal that is supposed to be paid over a stipulated time period is called the “interest rate”. The interest rate can be classified as:

  • Simple Interest - calculated on the basis of actual principal amount.
  • Real Interest - calculated by deducting the present interest rate and subtracting the inflation rate from it.
  • Compound Interest - calculated by addition of previous principal to the amount of interest on it.
  • Cumulative Interest Rate - determines which loan amount is going to be most feasible.
There are a variety of banks available in the United Kingdom that can get you a bank loan at the lowest interest rates. You can get bank loan for various purposes including buying a house or purchasing a car. Some of the major banks in United Kingdom are: Bank of England, Co-operative Bank, HSBC, Royal Bank of Scotland, Barclay’s Bank, Moneyback Bank, Alliance & Leicester, Sainsbury's Bank and Yorkshire Bank.


Bank of England Reduces Interest Rate to 5%

Bank of England is one of the major banks that provides loans to the majority of the populace. Recently, Bank of England reduced its interest rates by 5%. It took the bank rate to the minimum in less than a year. The pound declined in value as compared to the euro to become £1 to €1.247 in expectation of this rate cut. The major reason behind this rate cut is the worsening condition of the credit market. For the first time in England, the interest rates have fallen to this extent and Britain has negative interest rates that will raise borrowing costs.

For the first time inflation in England has risen above the bank rate. The present rate of inflation is 2.5% that is above the bank rate which is 2%. This is the first time in the history of Britain that the inflation rate has gone up and the interest rates have gone down.





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