You may be familiar with loans that you have to repay in instalments, such as mortgages, but instalment loans may not be something that you have hard of. They are a fairly new type of loan and are usually offered by lenders who are not so well-known as the high street banks. However, they are an interesting type of loan and it is worth knowing more about them in case you are ever in the situation where you may need to use them.
How do instalment loans work?
An instalment loan is a type of short-term loan where you repay in instalments. You will often borrow a relatively small amount of money and then repay across a series of months. You will often not need a good credit record as the loans are often available to most borrowers. You may also be able to get the money very quickly compared to some other types of loans.
This can be useful compared to some other short-term loans. Often these are payday loans where you will have to repay everything that you have borrowed in one lump sum on your next pay day. Although some people really like this idea because it means that they will be able to clear the debt quickly, it can be difficult to afford to repay it all in one go. Therefore, for some people, the idea of being able to spread the repayments over a series of months can be more attractive. The loan will still not last for a really long time, but it will mean that it is easier to repay. You may also be able to borrow more money as you will be able to afford to repay it more easily as you do not have to do so all in one go. Of course, how much you will be able to borrow will depend on the lender as they will decide how much to offer you. However, if you can show them that you are capable of repaying on time, then they will be more likely to lend you more money next time you borrow from them.
Are they right for me?
It is always worth looking at all loan types and comparing them to see which is right for you. It will very much depend on your personal circumstances as to which loan will work the best for you. If you have a good credit record then you will have a big choice of loans but if you do not then your choice will be more limited. It is worth, in all cases, taking a look at the loans and comparing them on the following –
- How much you can borrow
- How much they cost
- How the repayments work
- If there are conditions for borrowing (such as credit score or using money for a specific purpose)
Once you have looked at that you will be better able to see which types of loans will work best for your needs. By identifying what your borrowing needs are, you will then be able to match them up with the different loan types and you should easily be able to work out which ones will suit you the best. You may find that there are several types that will work for you and that you will want to compare them on price and other factors. Think about what is important to you form a lender as well as you will find that there are many lenders available and you will be able to choose between them. You might be interested in their customer service, how well-known they are, their ethical policy and things like that.
What are the alternatives?
You should also think about the alternatives. So, as well as possibly having different loan types to choose between you may also have other things to consider. For example, you may have savings that you could use instead of borrowing, you may have time to wait and save up instead of borrowing or you may be able to go without the item altogether. Deciding whether to borrow is very complex and there are often many things to consider and it is worth taking time to make up your mind. At the end of the day you will be trying to decide whether you feel that the loan will offer you good value for money. This means that you can justify the cost of it for the purpose that you need it for. Comparing it to other loan types and comparing lenders can help with this as you will hopefully be able to pick the loan you feel offers the best value and you will then be able to decide whether you feel that it is worth taking it out. If you feel it does offer good value for money then the chances are that you will want to take it out.
What Types of no Credit Check Loans are There?
If you have a poor credit report and know that you will not be able to get a traditional loan, then you may wonder what other options are available to you. You will find that there is a selection of loans which claim to be no credit check loans at times. Although in the UK all lenders are usually required to do a credit check, these loans will be more likely to lend to those with a poor credit score.