Residents of the UK have many options when it comes to getting a loan when they are in a tight money situation. Many lending and financing companies offer quick loans that are payable in a short time. If a borrower thinks that he cannot pay back a loan in 6 to 12 months, which is the case for a payday loan, he can take an instalment loan. But, what is an instalment loan?
As the term implies, instalments loans are credits that a borrower can pay in instalment basis. Instead of paying the amount that you borrowed in a single payment, you can pay it in several months. Some borrowers might opt to pay in three to six instalments while others may grant 24 months instalment of two years. Because you can divide the loan repayment into several instalments, you would be paying insignificant amounts every due date, making it easy to pay back the amount that you borrowed.
Instalment loans also have some benefits as follows:
You Deal with Direct Lenders
When you take an instalment loan, you directly deal with the lender instead of using a broker. One benefit of a direct loan is that you do not have to give your personal information to a broker who might share it to a third party, which can compromise your personal information and privacy. Instead, the direct lender would ask you to create an account so that you can log in to the website directly.
Some brokers earn a commission for every borrower that applies for a loan through them. The lending company could pass on the cost to the borrower, which could result in high application and processing fees.
Fast Approval and Release
When the direct lender is the one evaluating your loan application, approval can only take a few minutes after perusing your documents. After the approval, the lender would notify you that he has deposited the fund to your bank account or that your check is underway. The speed of the process would save you from worrying whether the lender would approve your loan or not.
Applicants with Bad Credit Are Welcome
Most people that apply for small loans are first-time borrowers and do not have any credit history yet. Borrowing from other lending companies might not be possible because they have no record yet. Taking an instalment loan is the easiest and fastest way of starting to build a credit history. Lending companies of instalment loans are willing to lend you money as long as they see that you are capable of making the agreed instalments.
Most Lenders Do Not Require Credit Check
In the UK, a credit investigation of the applicant is not an essential requirement. Nevertheless, some lenders take the initiative or conduct credit investigation to protect borrowers from getting caught in a cycle of debts that can destroy them in the future.
Fixed Interest Rate
The fixed interest rate of an instalment loan allows the borrower to predict the amount that he must allot for his debt payment every due date. He does not have to wait for the monthly notice of how much he must pay. As a result, he could make advance payment if he can spare more cash.
Bigger Loan Amounts
The amount that one can borrow from an instalment loan is more than the maximum amount that they can get from a payday loan. You can apply for £100-£10000, allowing you to have the amount you need for costly emergencies such as hospitalisation, education, and house repair.
If you need cash for some exigency, taking an instalment loan can help you meet your financial needs at an affordable interest rate and repayment schedule.