- August 29, 2020
Installment Loans: A Good Option If You Know Them Well
The need for credit has been at an all-time high in this decade in the country with increasing disposable incomes.
Millennial have been observed to spend freely in buying their first car or a new Smartphone. They are resorting to newer products of financing, and one such famous product is instalment loans as it provides the flexibility of monthly repayment. Let’s first get to know these loans in detail before going into its types and other conditions.
Instalment Loans: Do You Know Them?
An instalment loan is a simple type of loan wherein the borrower is expected to repay in a predefined number of schedule payments in its tenor. Unlike a payday loan, there is no such thing as repaying the complete loan amount in one goes at the end of its tenor. In addition, payday loans have exorbitantly higher interest rates compared to instalment loans.
These term loans are for the short period, and the monthly payments are a fixed amount. However, instalment loans are not short term loans because the former involves timely repayments, and the latter is one lump sum payment. In addition, the loan amount in such loans is higher than what unorganised short term lenders offer.
For instance: Suppose Mr X takes an instalment loan of £5000 to consolidate his credit card outstanding. After a deduction of 4% processing fees, the amount he received is £4800 and APR being 15% with a 36-month tenor. It means Mr X needs to repay the loan amount in 36 equal instalments of £174 every month.
These loans are quite simple, and they provide you flexibility in repayment and reduce your load as it beautifully spreads the cost of the loan. The tenor of these loans is usually decided based on the amount you wish to borrow. The tenor ranges anywhere between 3 to 48 months and in some cases you can chalk out a repayment plan and thus better manage your finances.
You can apply for this loan for any purpose, use it to repair your damaged car, replace your laptop, buy a two-wheeler, throw a surprise party etc. In a nutshell, be it a small expense or a big fat wedding, you can avail this facility.
Characteristics and Advantages of Instalment Loans
There are many benefits of taking an instalment loan, pertinent of them are listed below:
- Your monthly payments do not change, making money management easier for you.
- The application process of these loans is way too simple, and the online application does not take more than 10 minutes to apply.
- Loan calculator available online helps you to calculate the monthly outgo, which includes both the principal amount and the interest portion.
- In these loans, there are no hidden charges or late payment penalty usually. It makes it easier to know exactly how much this loan will cost you during its tenor.
- Another advantage of instalment loans is that it offers flexible repayment options. You can choose to pay monthly or even weekly with what you are comfortable.
- After your loan application is approved, the lending institution takes a day to transfer the loan amount to the borrower’s account
- The interest rates (APR, i.e. Annual Percentage Rate) is higher for these loans and ranges somewhere between 30-70%. The tenor is usually between 12 to 36 months. However, it can be lesser than 12 months.
- Another striking feature of these loans is that every stage of the loan is online, i.e. from applying for the loan to its repayment.
What if I have a substandard credit score?
You don’t have to panic if you are in dire need of a loan and the banks have rejected your loan application as you have a poor credit history. Prefer applying for an instalment loan which is an alternative financing solution online to get yourself a loan in no time. It is because these lenders look beyond your credit profile in deciding whether to approve your loan or not.
You can also try the no-risk option of loan eligibility to assess the chances of getting a loan before applying. It will not exacerbate your credit rating as well.
Choose the right lender!!
One last piece of advice here is to be entirely sure before taking instalment loans is that choose the right lender. Do thorough research and compare the interest rates, terms and conditions online set by different companies. Read the customer reviews on their website; take a second opinion about the credibility of the lender. It is also advisable by financial advisors about reading the policies of loan and repayment terms in great depth.