What are the Advantages of Instalment Loans Compared with Other Short-Term Loans?
If you have looked at short-term loans lately, you will see that there are now several different types. It used to be the case that it was pretty much only payday loans that were available, but now there is quite a range. This is handy because they have different features which means that you are more likely to be able to find one that will work for you. It is good to understand what the features are of each type of loan and how they might differ from other types of short term loans as this will then allow you to be able to make a choice between them and know exactly which will be the best for you to use.
What are instalment loans?
An instalment loan is a type of short-term loans. The name may seem odd, as many loans have to be repaid in instalments. However, the name probably comes from the fact that many associate payday loans with short-term loans and these have to be repaid in one lump sum. This means that you will have to find the money all in one go. Instalment loans do not require this and regular repayments will be available. They are similar though in the fact that you will not have to worry about your credit record. Although credit checks are done on all loans, instalment loans tend to be available to most people regardless of what their credit record looks like. It is also likely that they will be able to be arranged quickly as well, just like the payday loans.
How they differ from other short-term loans
- Regular repayments – as mentioned already, instalment loans allow you to make more than one repayment. This means that you will not be repaying hat you have borrowed in one lump sum but you will be making several payments over several months. The amount that you make and how much they are will depend on the lender and loan that you choose.
- Easier to manage – as you are making regular repayments these loans can potentially be easier to manage. You will be spreading the cost of the loan more and that means that you will not have to find the money all in one go. If you have to find a lump sum, it may seem easy as you will do it on the day that you are paid, but you will then need to manage to pay for everything else that you need with less money. This may not be so easy and it could mean that you will potentially struggle for money or may even have to take another loan out just so that you can manage.
- Can borrow more money – as you have longer to repay and repay in smaller instalments it could mean that you will be able to borrow more money. This will depend on the lender as some may be willing to lend you more than others. However, you could find that you will be able to borrow more because you will be able to afford the repayments as there are more of them.
- Do not need a guarantor – some short-term loans require a guarantor. This is because they will lend larger amounts of money and for a longer period. These guarantor loans rely on your knowing someone that has a good credit record who is prepared to help you out and pay for any repayments that you have missed. This is something that not everyone will be able to do as not everyone will know someone that they will be able to get help from.
- Do not need collateral – for some short-term loans, such as log book loans you will need a vehicle as collateral. This can be a risky thing to offer as if you miss repayments your vehicle will get repossessed. If you need that vehicle to get to work, then you could end up losing your job because you cannot get there. This is not ideal and therefore using an instalment loan instead could be a much better option.
So, you can see that there are quite a few significant differences between instalment loans and other types of short-term loans. It is a good idea to find out much more about them though, before you decide whether they are the right type of loan for you. The loans will vary in different ways depending on the lender that you go with and so it is wise to make sure that you find out all of the details before you choose which one to take out. Compare the different loan types and also compare the different lenders. You will find that they will differ quite a lot, in the way that they work as well as how much they cost and it is important to find the loan that will suit your needs and therefore provide you with the best value for money. Then you will have a really great borrowing experience.