An Introduction to Instalment Loans
Instalment loans (sometimes referred to as 12 month loans or short term loans) are a relatively new addition to the unsecured loan market. They were launched with the goal of bridging the gap between mainstream unsecured loans and payday loans.
They are generally aimed at those with a less than perfect credit history who have been unable to get approved by their bank. They are also aimed at those who are unable to get a guarantor for a guarantor loan and are not willing to use their car as security for a logbook loan.
What is an Instalment Loan
Instalment loans are quite a diverse product and it seems everyone has their own idea of what an instalment loan actually is. As the instalment loan market has grown, more and more lenders have entered the market, each offering a slightly different product at slightly different rates. Generally speaking though, instalment lenders will offer up to £2000 which is often repayable over a term of up to 2 years. Many also see instalment loans as an alternative to payday loans as lenders allow you to borrow as little as a few hundred pounds, however as the title suggests you repay this in instalments (either weekly or monthly) rather than in full.
As I outlined above, instalment loans are a type of personal loan meaning they can be used for almost any personal purpose. Many use them to consolidate payday loan debt or cover unexpected bills such as car repairs or the replacement of household appliances like washing machines or dishwashers.
How can I apply?
Much like the majority of subprime lenders these days, instalment loan lenders will be based online meaning there is very little paperwork involved in the application process. This also means that lenders are able to process the loan very quickly with some being able to offer a 1 hour turn around. Different lenders will have different processes; some will carry out credit checks while others may also utilise affordability checks to assess whether the applicant can comfortably afford the loan repayments alongside all current credit commitments.
Prior to applying for an instalment loan it is definitely worth exploring the lenders website to see exactly how their process works. Their FAQ page should answer any questions you may have however if not it is certainly worth your time to give them a call. All legitimate lenders will have a Free phone number with a well-trained agent at the other end of the phone who is happy to answer any questions. Be wary of any lenders who do not have a ‘contact us’ page; they may be a broker who will charge you a fee.
Beware of brokers
Despite the best efforts of the regulatory bodies, the subprime market is still littered with brokers who charge a fee for the service of finding you a suitable lender. In order to avoid brokers always apply with a recognised lender who state clearly on their website that they charge no fees.