Instalment loans allow the borrower to simply repay the money back in smaller, manageable amounts over a fixed number of months.
The meaning of an instalment loan is typically referred to a loan which is paid out to the borrower in one lump sum. This is then paid back with added interest to the lender in fixed amounts of scheduled payments over a mutually agreed time frame. The instalment loan repayment schedule can either be paid in a weekly or pay monthly way, depending on the loan agreement.
The term instalment loan is used to categorise any loan that you pay back in smaller chunks called ‘instalments’ over a long period, rather than paying it back in a single repayment.
Instalment loans are used to categorise the majority of loan types. For example, the most common instalment loan types are mortgages, personal loans, short term loans and car loans. They all allow you to borrow a large amount that you pay off in a series of multiple installments over a specific period.
This type of loan can be used for purposes such as unexpected emergencies, urgent repairs and maintenance. It is not intended to be used to help pay rent, food bills, energy bills or any other essential living expenses.
Instalment loans are incredibly popular, and this probably indicates that they have a fair few benefits, which is excellent news if you’re looking to take one out.
One of the most significant benefits that borrowers find is that this type of loan offers a flexible repayment schedule. This means you’re in control of how much you pay back each month and for how long. This makes it easier for the borrower in some way as the stability of knowing how much you have to pay back each month comes in very handy. Plus, it also helps when you are trying to plan and budget all of your finances. It also means you don’t have the stress of having to pay the loan back in one lump sum, which for most people, just isn’t an option.
We all know taking out a loan isn’t all sunshine and rainbows, and there’s always a risk to borrowing money. However, done properly, an installment loan is pretty much plain sailing.
As long as you keep up with your scheduled payment, there really shouldn’t be anything to worry about.
Another thing to look out for is the cost. Although interest rates and APR’s may seem lower than short term payday loans, it can become expensive when borrowing over a longer-term.
Rates and charges will vary significantly from lender to lender. The amount you borrow and the length of the term you choose to pay it over can both affect how much you will payback.
One great thing about instalment loans is that your interest rate will generally be lower than say, a payday loan. When you’re paying your loan back over a certain amount of months or even years, it helps spread the cost of the loan, keeping repayments affordable.
Responsible lenders will take steps to perform rigorous affordability checks to make sure you have the ability to repay the loan. They will consider your total income and outgoings to determine a suitable repayment schedule for your circumstances.
As with any loan, always make sure to check exactly how much you’ll be paying back and if you will be able to make the payments comfortably.
Missing payments and getting into debt can happen to anyone. If you find yourself struggling to repay the loan, the lender may hit you with late penalty fees and other charges. The best course of action is to contact the lender immediately to arrange a plan. Missing or late repayments may also affect your credit score.
Always remember to budget wisely and make sure you have sufficient funds each month to make that payment.
The wide range of lenders we work with will consider your application even if you have a poor or bad credit history . However, as your credit score tells the lender how responsible you are as a borrower, you may find it harder to get a loan.
Having adverse credit may limit you to smaller loan amounts and higher interest rates, compared to someone who has good credit.
Having a good credit score can give you a better chance of acceptance and access to better interest rates with the lender.
In the months before applying, you want to make sure that you’ve got a great credit score. It would be like turning up to the dentist without brushing your teeth. Your dentist wants to see your pearly whites in the best condition possible. Lenders want to see your credit score as best as it can be. If you show them a great credit score, it will assure them that you’re a great candidate for an instalment loan.
If you have a bad credit history, there are several ways you can do to improve your credit score. Credit agencies like Credit Karma allow you to access your credit report online for free. They also provide help and advice on how to rebuild your credit rating.
Absolutely. Any business that lends money to consumers in the UK must be regulated by the Financial Conduct Authority (FCA). Therefore, instalment loan lenders are regulated, and they must adhere to the strict compliance guidelines and practices that the FCA set out.
As an FCA regulated broker, ThisLender also adheres to compliance and strict industry practice. To check if a consumer credit provider is regulated, you can search the Financial Services Register at any time.
|Why use us?|
|How much can I borrow?||£100 - £5,000|
|What are the repayment terms?||3 to 24 months|
|How long does it take to receive money?||10 minutes²|
|Do you charge a fee?||No fees|
You will need to meet specific criteria to be eligible to apply for an instalment loan. Not all UK direct lenders will have the same eligibility criteria. Generally, anyone living in the UK, aged over 18 years with a regular income is welcome to apply for this type of credit.
All applicants will be subject to credit and affordability checks by the lender before the loan is released. This is done to confirm that you can afford to repay the loan.
So, whether you’re purchasing something or need an emergency cash loan, these types of loans offer the stability of paying it off in manageable weekly or monthly fixed payments. Installment loans can give you the freedom to devise a plan to ensure that you have the flexibility to keep up with your other financial commitments.
If you are having financial difficulties or need to speak to someone regarding your financial situation before applying for a loan you can get free and confidential advice from The Money Advice Service, National Debtline or debt charity StepChange.
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Representative 97% APR (fixed)
Representative example: Borrow £1000 for 24 months at 24 equal instalments of £77.48. Total amount to repay £1,859.52. Interest £859.52. Annual interest rate 70% (fixed). APR rates range from 45.3% APR. to 1575% Max APR. Your APR rate will be based on your circumstances.
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