Instalment loans continue to grow in popularity due to their flexibility and affordability. Instalment loans provide our customers with another option, if the payday loan does not help their current situation.
Difference between Instalment Loans and Payday Loans?
The term “payday loan” is a term used for small-figure loans, taken out for a short period of time. It was found that borrowers were opting for small cash loans to bridge the gap between now, and their next pay day. Banks refuse any loans under £1,000, and will continue to do so.
Instalment loans, on the other hand, usually involve small figure loans, taken out for months at a time. Taking a loan out for 3 months instead of 1, lowers the monthly payments. Although it is more affordable for the customer, it means paying more interest, overall.
Is an instalment loan right for me?
Before agreeing to an instalment loan, try to understand your budget, and how much you can afford each month. By understanding your financial limits, you can determine whether an instalment loan works best. If you can pay back the entire loan amount within thirty days, then we suggest taking out a payday loan. The earlier you pay off the loan, the less interest you will have to pay.
If for example, you need to repair your boiler, but you cannot afford to repay the entire loan amount within thirty days, consider the instalment loan. This way, you can pay back the loan over a series of instalments, making the loan more affordable.
Things to watch out for
When calculating your income and expenditure, factor in your luxuries and emergencies. Do not set unrealistic targets, as this could lead to future problems and additional charges if the repayments cannot be met. Give yourself some financial leeway when budgeting.
Understand the loan
We highly advise that you read through the Loan’s terms and conditions before making a decision. Okay, so you may not want to read through the entire Term and Conditions, but there are some things you want to look into. For example, can you pay off the loan early? Will you incur further charges if you pay off the loan early?