An instalment loan is a form of short-term finance which you can take out where you pay the loan down over a set period of time rather than in one big lump sum like a payday loan. Instalment loans can take the form of a mortgage, an auto loan, a personal loan, or a student loan.
Instalment loans differ from payday loans because they are paid off over a pre-defined length of time. Payday loans, on the other hand, are always paid back on the following payday with very little flexibility in terms of repayment options.
Why might you consider taking out an instalment loan?
There are many reasons why instalment loans are so popular. You can take out an instalment loan to consolidate all of your debts into one easily manageable monthly payment or you can make one-off purchases with the money and then pay it back over time.
Instalment loans make covering the costs of any emergencies easy. If your car breaks down and it needs repairing and you don’t have the money available at the time, you can take out an instalment loan to pay for it and spread the cost over a few month. This way, you can afford to make a large payment to your garage while running out of cash in your main bank account.
Instalment loans are a type of “closed credit” loans. Closed credit loans are made for specific, one-off purchases such as covering a car breakdown or for home improvements. The other kind of loan is called “revolving credit”. The most popular example of this is a credit card which can be used for multiple purchases. However, you normally can’t borrow very much on a credit card and the interest you’ll end up paying works out as a lot more if you only even make the minimum monthly repayment.
How long is the repayment period for an instalment loan?
Instalment loans can be repaid over the course of anywhere between 30 days and 12 months. This all depends on the lender that you choose to work with. Instalment loans come in all shapes and sizes and each lender offers specific types of loans to specific types of borrowers.
You can spend hours looking at all the different variations of instalment loans that are available on the market. More and more people use brokers like Loan Princess to cut out the work involved and to secure them a better chance of finding a lender who will say “yes”.
How much money can I borrow with an instalment loan?
Once again, this depends on the loan provider that you choose to work with. There will be some loan providers who are only willing to lend you a minimum of £500 and there will be others who will go all the way up to £2,500 and beyond.
Many loan providers have additional options for people who they have lent money to in the past. So, your first-time loan application might not get you the best offer that the company can offer. If you stay with a company long enough and you consistently make loan repayments on time and in full, you may be offered the ability to lend more money at a discounted rate.
Who is an instalment loan intended for?
Because of the diversity that comes with the range of instalment loans that you can apply for, they aren’t designed with any one person in mind.
That being said, people with steady incomes and a good credit score will have the most options to choose from. This is because more lenders will actively be looking to provide these people with finance.
If you’re self-employed, you can still get an instalment loan (there are providers that specialise in dealing with self-employed people and the financial situations that come with that employment choice).
Additionally, if you do not work, you may also eligible for instalment loans. So long as you have a reliable income coming into your bank account, you may be able to find a loan provider who will be willing to work with you.
Do you need a good credit score to take out an instalment loan?
No. If you have a low credit score (or if you have no credit score at all) you will still be able to find a provider willing to approve your application. Just as with self-employed people, there are loan providers who work specifically with those who have a low credit score.
Many people with poor credit scores believe that you need a guarantor to be accepted for a loan. A guarantor is somebody who will pay off your loan in the event that you cannot.
If you can’t find somebody to be your guarantor and you have a poor credit score, there are still plenty of options available to you. No matter what your financial situation, there is nearly always a lender who can give you the finance that you need.
Instalment loans with Loan Princess
If you’re looking for an instalment loan, try Loan Princess. We are a loan broker, not a direct lender. This means that we send your application to our vast panel of lenders who will each give you their best offer.
It all starts with your application to Loan Princess. Tell us a bit about yourself – how much you earn, how much you’d like to borrow, and a few other pieces of personal and financial information. We’ll then compare what you’ve told us against the types of borrowers that our lenders have told us they like to work with. Once we know which companies are most likely to lend to you, we’ll forward your details to them together with a copy of your credit report.
Within seconds, we’ll get lenders’ best offers back. We’ll show you the best offer we’ve received including information on how much the monthly repayments on your instalment loan are and the total amount of interest you’ll pay in addition to other information.
If you’re happy to proceed, sign the agreement form online and, depending on your bank, your money could be with you within the hour. If you don’t, that’s no problem. Our service is free, there’s no obligation, and you’ll never pay more using Loan Princess than you would if you approach a lender direct.