What is an instalment loan?
Instalment loans are just like any other loan because you essentially take a loan amount and repay it along with an interest over and above the original amount. However, in these types of loans the repayment is to be done over a longer period of time usually in an amount of installments decided at the time of taking the loan. The period of time and amount of each repayment is usually decided by the borrower and the lender together. These loans are different from short term loans in that usually short term loans have to be repaid in a single lump sum and the duration for them is also very short.
Sometimes the longer duration is also combined with a larger loan amount and lower interest rates. However, just because the interest rate is lower it does not mean that the total amount that you repay the lender will be lower. This will in fact, depend on the duration of the loan along with the rate of interest.
Things you should consider before you apply for an instalment loan
- The first thing to be considered is the type of loan that you should opt for and this depends on your requirement. Do you need the loan for starting a small business, for a wedding or for some home improvements? Whatever the purpose of the loan, it will decide which type of loan that you should opt for. If you feel at a loss in making this decision then your best bet is to approach Loan Broker because we are a certified and registered loan brokering company based in the UK. We will analyse your financial requirements and suggest the exact type of loan that will suit your needs.
- The second thing you need to consider is the amount of loan that you require. Do you want to apply for instalment loans online because you need a large sum of money as in the case of a home improvement plan, or will a smaller sum suffice? This is an important question to ask yourself because it is best to avoid too much debt unless you really need it. Here again we will come to your rescue and help you in deciding the loan amount based on your exact financial requirements.
- The third thing that you need to consider is the tenure of the loan and the repayment amount for each installment. In this case you can create a budget with the help of our loan advisors and check the amount of money you can spare from your monthly expenses. It is very important to consider this factor because if you are unable to repay your installment loans within the stipulated period of time or you are unable to shell out the exact amount of each instalment then you will end up as a defaulter and this can injure your credit score.
- The last but not the least is to know your credit score. This is because it is good to understand where you stand when you are applying for installment loans. Most lenders prefer reducing their level of risk by lending to borrowers with a good credit score and credit history. However, we can also help you find lenders who will be happy to provide instalment loans for bad credit. Of course you need to bear in mind that even though the interest rate on loans for bad credit are higher they are a good instrument to repair your credit score if you make the instalment payments on time and regularly.