There are many different loan types and it can be confusing at times knowing which ones will be the best for you. There are some loans which have specific purposes and many that we tend to know a lot about. However, there are some newer types of loan, perhaps ones that are not used by so many people, that we might want to find out more about. It can be wise to know about all of our borrowing options as that will help us to make the very best choice when it comes to borrowing. We want to make sure that we do not rule out any options until we are completely sure that those particular loans will not be suitable for us. Therefore, finding out about more unusual loans, such as instalment loans is worth it.
Instalment loans do have some main differences compared to other loans and it is good to see what the advantages are so that you can decide whether they are the right loan for you.
- Lend to those with poor credit record – if you have a poor credit record then you will have less choices when it come to borrowing money. You will need to choose form the small number of lenders that are willing to lend money to those that do not have a good credit report. There are some types of loans where you can do this and an instalment loan is one of these. It means that if you need some money and you do not have a good credit record then you actually can borrow. This is different to a few decades ago when there were no options for those who had a poor credit report apart from asking other people directly if they could borrow from them. It can be great to now have these options as just because you have a poor credit record does not mean that you do not need to borrow money.
- Can repay in instalments – Not all loans can be repaid in instalments. The most well-known type of loan that is available to those with a poor credit record is a payday loan. These normally have to be repaid in full in a lump sum and so it could be the case that people may feel that all short-terms loans are like this. However, the instalment loan is different and you can therefore repay over a longer period of time. This may mean that the loan will be more expensive but that you will be able to find the repayments much more manageable. Tis can not only reduce the stress of the loan but will mean that it is less likely that you will miss a repayment. If you miss a repayment you will get charged extra money and so that could mean that the payday loan will end up being dearer anyway because you were not able to repay it on time. Even if you do repay it, you may find that you will still be struggling with money to cover the rest of your bills and may need to get another one. If you repay in instalments this is less likely to happen.
- Quick to arrange – payday loans are known for being useful for emergencies because they are quick to arrange and instalment loans are the same. This means that if you need money really quickly then they could be the loan for you. Depending on which lender you choose it could be possible to get the money that you need within a few hours and this means that if you are in an emergency situation and you cannot wait for money, this will help you. So if you have been waiting to pay a bill and need the money quickly or else you will be cut off or evicted, you need to buy food for your family or you need to replace a broken item then this sort of speed to arrange the loan could be of particular benefit for you. Sometimes we just need money extremely quickly and other loans will just take too long to arrange. More traditional lenders are unlikely to be able to get you the money that you need very quickly. They will tend to take at least a few days, if not considerably longer to arrange a loan for you. It could be too late by then as you may not be able to go without the money for as long as a few days if you are in an emergency situation such as those listed..
It is worth remembering these features and then if you do need money quickly, want to repay over several months and have a poor credit record then you will know that this loan will be the right one for you.