Payday loans, instalment loans, loans, loans, loans. . . There are so many different types of loans out there, that it can be overwhelming to know which or what you need. As responsible lenders, we believe that customers should have access to clear, straightforward information that educates them with the knowledge of what these products are before they borrow money.
An instalment loan is a type of loan that is repaid over time through a set number of scheduled payments rather than in one payment. These repayments can also be referred to as ‘installments’. Usually, at least two payments are made towards the loan which may last for as little as a few months or as long as 30 years.
Instalment loan repayments are becoming ever more popular with UK borrowers as it offers far greater flexibility than other loans. Customers regard instalment loans as a more affordable and a safer alternative to cash advancements and payday loans. Allowing borrowers to repay with variable or fixed payments, over a set length of time.
Interest rates will be different based on what was agreed but are often lower compared to credit cards or payday loans. Therefore meaning a more predictable monthly payment for the borrower. It is also more likely that with an instalment loan, you can (subject to assessment) borrow more than you could with a payday loan. The longer the repayment term is the lower the monthly payments that a borrower pays. However, like all loans and debts, it is advisable to pay more back, if you can, to pay the loan off quicker.
Why would I need an instalment loan?
Instalment loans can be used to cover a range of unexpected costs just like a payday loan. However, it should be used in situations where the expense is large and you are unable to settle it in one repayment. Instalment loans can be a good way to deal with unexpected bills such as car problems, broken boiler and other emergent problems.
Before selecting a lender to borrow from, remember it’s always best to shop around to find a suitable lender with good repayment periods and interest rates according to your needs. Keep in mind that if you don’t pay back your loan according to your pre-agreed terms, the consequences can vary depending on your situation but will cause your credit score to drop.