Category: Loans

5 Top Reasons to Opt for Instalment Loans

Instalment loans have become an option for people that need cash but cannot pay back the whole amount that he borrowed in a short time. Taking an instalment loan will allow you to make a fixed monthly payment for three years, five years, and even longer depending on the amount that you borrowed and the terms of the loan. Instalment loans do not always involve a cash debt. Car loans and mortgage loans are also a type of instalment loan because you must repay them in fixed monthly instalments until you have paid the principal amount plus interest.

Here are the five top reasons to choose an instalment loan to finance your needs.

Flexible Repayment Period 

Unlike other loan products, borrowing on instalment has more flexibility than taking different types of credit. As the term implies, and instalment loan allows the borrower to pay back the amount that he borrowed in several instalments, usually monthly over the agreed number of years. A borrower may choose to repay the loan in 36 monthly instalments or three years, 60 months or five years, or 120 months or ten years.

When you take other short term loans, the lender expects you to settle your debt in three months to six months. For a payday loan, you can only borrow a small amount, which you must disburse lump sum on the next payday. If you need to borrow a significant amount, but you still can afford to pay, an instalment loan will be perfect for you. The principal plus that interest is spread over several months so that you will only pay a small amount on the due date until you have paid your debt in full. However, if you pay back your loan over a short time, the cost of your loan could be lower than paying if for many years.

Predictable Amount to Pay

An instalment loan comes with a fixed amount to pay on a specific date. For example, if you must pay £150 every 10th day of the month, you will pay the same every month until you have paid your debt. Making the timely payment is important to avoid penalties, which can increase the payment due because of late payment charges. If ever you have extra earnings, always allot £150 for your debt and never use the money for other purposes.

Fixed Interest Rate

Lending companies use either a variable interest or a fixed rate. A variable part may change depending on the current bank rates. For example, if the bank rate was 20% when you took the loan, it could go up or down, depending on the interest rate of the banks. If next month, the bank rate is 10%, your amount due could go down. But, if the interest rate is 30%, the amount payable could go up. With a fixed interest rate, you always know how much money to set aside for your debt.

Longer-Term

You can pay back an instalment loan for several years. The cost might be higher in the short term, but if you do not have a sure source of cash to pay more than you can afford, the long term repayment scheme could help. Because the lender spreads over several months the amount that you must pay, it would easy for you to manage.

Speedy Processing and Release of Funds

Borrowers who can submit the complete requirements early can get the funds early as well. Approval and release of the loan are for two days to two weeks, depending on the completeness of the documents that you submit to the lender.

Best Features of Doorstep Loans

Doorstep loan, also known as a door-to-door loan or home credit, is one of the many loan products that many lending companies in the United Kingdom offer. As the name implies, the transaction mostly happens in your home or on your doorstep. You apply online, and once the lender approves your loan application, the lender’s local agent will visit you for a face-to-face discussion of the terms and conditions as well as repayment terms. Here are some of the outstanding features of a doorstep loan.

Speedy Approval

Most people resort to borrowing because they need cash immediately. Many of them are looking for a small amount to borrow and secure repayment scheme. A doorstep loan is perfect for these people. One can apply online by submitting an application form. The lending company will send its agents to discuss the terms and conditions of the loan and the repayment scheme. These agents will also assess the applicant’s capacity to pay. Once the agents have made their report, the lender would decide to approve the loan or not. In most cases, most of the applicants can get a loan. Most doorstep lenders boast of high acceptance rate since they can accommodate applicants that other lending companies have rejected.

Home Delivery and Collection

One unique feature of a doorstep loan is the home delivery of the funds. Once the lender has approved the application, the company will send an agent to deliver the loan amount to the borrower. The agent will hand-in the money personally to the borrower. The agents will also come to collect the payments on the agreed due dates, specifically weekly.

Lenders use locals to serve as agents because they know most of the people and their addresses in the neighbourhood. With this collection system, borrowers do not need to have bank accounts to avail of doorstep loan. This condition is favourable to UK residents that do not have a bank account or live in far-flung areas. The collection agents keep a record of all payments so that the borrower would know the number of mortgages that he was able to make.

Accepts Bad Credit

Unlike other short term loans that require good credit rating, doorstep lenders welcome those with bad credit history. Bad credit refers to a person whose credit history shows unpaid debts and other financial obligations. Three major credit reference bureaus collect the data so that lending and finance companies could check if their credit score could qualify them for a loan.

There are three major credit reference agencies in the UK. These are the Experian, Equifax, and TransUnion. Nevertheless, this requirement cannot apply to doorstep borrowers because this group belongs to the lowest-income group in the community. Many of them do not have bank accounts or credit cards. Other lending companies are afraid to give them a loan because they might not be able to pay their debts. However, doorstep lenders offer small amounts with a manageable repayment scheme so that even those with bad credit can quickly pay back their loan.

People on Benefits Are Welcome  

You do not have to be regularly employed to qualify for a doorstep loan. Even people on government benefits are welcome to apply. However, if you think you cannot pay on a specific due date, you must let the agent know in advance so that both can decide on an alternative way of paying his loan.

No Hidden Fees       

With a doorstep loan, borrowers do not have to worry about hidden fees such as late payment charges that can be 2% to 3% of the equated monthly payments.

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