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Loans have become helpful in a number of ways. Before, anyone who’s running out of cash depends on it but now, even those who just need extra cash to purchase properties can depend on it. There are installment loans available, allowing you to borrow once (up front) but instead of repaying in one lump sum, you can settle it according to a schedule. Some of its common examples are auto loans and mortgages.

The loan may offer a larger amount up to £10,000, which is payable within a year or up to ten years, depending on the loan provider. Its settlement is calculated using the original loan amount, interest, fees, and the time you have to repay the debt. Here are more things you need to know about installment loans:

instalment loans online from direct lenders

How Do Installment Loans work?

Unlike payday loans, installment loans are repaid in ongoing fixed regular installments. Almost anyone can rely on this loan, even those who have a bad credit history or have no credit history at all; however, this is an ideal option for borrowers with a good or excellent credit remark. Every installment option comes with different terms but in general, it looks like this:

  • Repayment Terms

An installment loan is payable between 4 months up to 25 years, depending on the amount and the lender’s terms and conditions.

  • Mode Of Payment

Lenders have different repayment options but the most usual one is an automatic deduction of the monthly repayment from your bank account. This means that you don’t have to visit the loan office personally. Some loan providers may offer more convenient options such as paying through an app, check, or online.

  • Frequency Of The Repayment

How frequent you need to settle loan depends on the agreed repayment due date between you and the loan provider. Usually, it happens once a month.

Costs Associated With The Loan

Every installment loans provider has created different terms and conditions, and this affects the costs related to the loan itself. That’s why it’s important to read the loan contract thoroughly to avoid repaying for hidden charges. Not all lenders are transparent with their fees and to avoid any confusion, understanding the fine print is a must. Here are some of the charges you may encounter.

  • Annual Percentage Rate (APR)

APR is the most important thing you should look at before getting the loan. The yearly percentage has consisted of all the fees and interest. This lets you know whether the loan is reasonable or not.

  • Fees

Each installment loans provider has their own fees, which may include origination fee or charges for early or late repayments.

  • Interest

Interest rates, which are expressed in a percentage, are usually associated with the loan. This depends on how risky the borrower is or how long it will be settled. The longer the repayment and the riskier the loan seeker is, the higher the interest rate charged.

Who Are Eligible To Get Installment Loans?

Installment loans usually offer a bigger amount, compared to payday loans; however, the requirements are often easy to comply. The prerequisites include the borrower’s income, credit history, employment, and bank account. These, and sometimes collateral, will determine your eligibility. If you have a bad credit rating but you meet the other requirements, you may ask your lender if they’re willing to accept your case. Otherwise, you may look for another company instead.

Choosing A Lender

Installment loans are more affordable when you can’t settle the debt in one lump sum; however, its advantages still depend on the loan provider. Therefore, it’s necessary to find the right one first to ensure a great lending experience. Searching for a company can be overwhelming at first, especially with a number of online loan providers present online but once you learned to distinguish reputable lenders from scammers, it will be a lot easier. Below are the other things you need to consider when looking for an installment loans provider:

– Transparency

Applying for a loan involved sharing your confidential details and money, thus it’s really imperative to choose a company who is transparent enough with their loan contract and service. Find someone who is not hesitant to disclose rates, charges, and other loan-related details to avoid hidden charges.

–  Good Customer Service

Concerns or problems are inevitable, no matter how stable the lender is. Therefore, it’s important to consider someone who will answer your problems in a friendly, professional way. Also, find a loan company that is available 24/7 so you can still send an application no matter how limited your schedule is.

– Low-Interest Rate

As much as possible, minimize your costs so you can settle the loan easily. Find a lender who offers lower interest rate and fewer charges.

– Stability

Consider a loan provider who’s been in the lending industry for a long time, or at least has good number of years. Make sure that their feedbacks are mostly positive to avoid bad experiences. To do this, read the reviews from their previous clients and weigh whether they’re worth considering or not.

Working With Loan Brokers

Choosing a lender is quite difficult, especially with a number of choices nowadays. It’s normal, no matter how long you’ve been borrowing, and this is also one of the few reasons why it’s important to consider a loan broker.

Loans brokers have been ignored by many borrowers without considering the benefits of these professionals. They have experiences and education that can back up their knowledge and skills in finding the right match for the borrower. Basically, their job is to help loan seekers find a loan provider who will suit your requirements. It is easier since they have a wide access to different installment loans providers.

However, considering them also mean considering additional expenses. Therefore, to avoid other costs, find someone who will offer a free service. Rather than getting the commission directly from you, they will earn by getting paid by the lender for a successful loan application. Like loans, you have to look for the right loan brokers who have earned a number of positive reviews.

 

 

Representative Example:
305.9% APR. £400 borrowed for 90 days.
Total amount repayable is £561.92 in 3 monthly instalments of £187.31.
Interest charged is £161.92, interest rate 161.9% (variable)

Please note:
Loanora is NOT a lender – we are a licensed broker working with the most popular direct lenders in the market to find you the most suitable short-term loan plan. Our FREE quoting service compares more than 40 lenders quickly and finds you a lender with the lowest rate that they are willing to lend to you today.

Rates from 45.3% APR to 1575% APR – we provide a no obligation quote, your APR will be based on your personal circumstances