5 Fast Facts about Instalment Loans

1. You are able to borrow between £100 and £2000

Different lenders will offer different amounts, however in general the minimum amount available on instalment loans is £100 and the maximum is £2000. In the unsecured market they sit nicely in between payday loans and logbook or guarantor loans and are designed for those who have a less than perfect credit history who are looking for a financial solution with longevity. Those that apply for instalment loans are generally unable to find a guarantor or are not willing to lose their car when borrowing through logbook lenders.

2. You can stipulate the loan term to make the repayments fit your budget

As you’d expect, instalment loans are repaid in either weekly or monthly instalments (depending on the amount being applied for). Lenders will allow you to stipulate the term (often using the sliders on their website) to find repayments that fit your budget. By spreading the loan over a longer term you will find that the instalment amounts are smaller but the total repayable amount is large, whilst taking out a short term loan will make the repayments larger but the total repayment amount smaller.

3. They are not in the same category as payday loans

The clue here is in the title, instalment loans are repaid in instalments – payday loans are repaid in full. Payday loans should only ever be seen as a short term fix to financial problems whereas instalment loans can be used as a long term solution. The association probably comes from the fact that instalment loan lenders offer similar amounts to payday lenders however this is really where the likenesses end. Often, borrowers will use instalment loans to repay payday loan debt.

4. They can be used for a variety of purposes

Instalment loans are a variety of personal loan meaning they can be used for a wide range of personal purposes. As I touched on above, a popular use of instalment loans is consolidating short term loan or credit card debt. Many also use instalment loans to cover the cost of expensive car repairs, make home improvements or help out with finishing touches to their wedding plans.

5. Legitimate lenders will not charge a fee

Prior to applying with any lender you should browse their website and check whether or not they charge an upfront fee as part of the application process. It is often brokers who charge a fee for the service of sourcing you a suitable lender; legitimate lenders will not charge any upfront fees. If you are ever asked for your credit card details as part of an instalment loan (or any other loan application for that matter) application, abort it at that stage and tell the lender you are no longer interested. There is a chance the lender will take your bank details (i.e. sort code and account number) upfront however this is only so that they have the details to pay the loan into if the application is successful.

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