Installment loans are quite new to the UK market place, however they have been around in the US for a long time. They are very simple loan and a welcomed addition to the lending market place, often taking the place of the more traditional, short-term payday loans.
How do installment loans work?
As the name applies these type of loans are paid back in installments, rather than within a 30 day time frame as you would have found with payday loans. Loan repayments can be in 3 month, 6 month or 12 month as is standard with most of these types of lenders.
The amount of time you take to repay your loan is reflected in the interest rates that are charged by the lender. faster repayment periods often carry a higher rate of interest, while longer repayment terms such as a 12 month period will generally offer a lower rate of interest for the same amount borrowed over a 3 or 6 monthly period. Often lenders have to charge higher rates on shorter term loans to make up for the upfront costs of arranging and setting up the loan. Hence this is the reason why many lenders charge 1000% APR figures for payday style loans.
How much can you borrow?
With an installment loan you are able to borrow more when compared to a short-term or payday type loan. Loans amounts range from £200 – £2000 depending on your choice of lender. Loans can be issued quickly to meet their customers needs and many offer sameday loans or loans that can be provided within just a few hours for existing customers who have passed the application stage.
How much do they cost?
Installment loans are cheaper than short term loans, and most lenders of this nature charge rates of 600 – 800% APR depending on your credit rating, score and your credit profile in general. How much you wish to borrow and the loan amount will also change the amount of interest payment. Larger loans generally offer lower rates while smaller rates carry a larger rate of interest.
What can they be used for?
Your loan is like any other type of personal loan and can be used for any purpose. The only thing the lender cares about is that you are able to pay back what you owe plus interest within the term of the loan.
Most of the lenders we spoke to are willing to borrow to those who have some history of adverse credit, this means they will accept fair – poor credit applicants. This may mean that you’ll have some historic CCJ’s, defaults or missed payments on your bank accounts. If you are unsure about your credit profile then they are a number of services that allow you to check your credit history and find out your credit score for free.
We have recently started to get some requests from previous customers to ask if they are able to get a loan secured against their car or vehicle. These types of loan are known in the industry as “logbook loans” or bill of sale loan agreements. Often they are used when larger loans are required from £1000 plus.
For people with really bad credit
They offer an alternative type of loan for those with a blemished credit record and have been refused credit with a regular personal loan.
What are the risks?
Rates are quite expensive at around 100% APR and if you were unable to repay your loan or you fell behind with your loan payments you could be at risk of losing your car to repossession. However, for some people they do offer a lifeline when no other options exist.
If you have a poor credit rating and need a larger loan from £500 – £12,000 on an unsecured personal loan basis then you may find that getting a guarantor loan is your best bet.
We have team up with Guarantormyloan to offer our customers a poor credit loan solution with much lower rates when compared with convential bad credit loan providers. As the name suggests, to get a guarantor loan you’ll need to have someone who is willing to be a guarantor on your behalf.
How much can you borrow?
We can lend amounts from £500 up to a maximum loan value of £12,000 over 12 months to 60 month terms (1-5 years). Rates start at as low as 45% APR and vary from applicant to applicant. Those who have a fair to good credit rating will get the lowest rates and those with more adverse credit will be charged a higher rate as you pose a higher risk to the lender.
Who can be your loan guarantor?
Anyone who is willing to co-sign your loan and act as a guarantor. They must be willing and able to repay the loan if you (the main borrower) failed to meet the repayments or pay back the full amount of the loan plus any outstanding interest, charges and fees that are due.
What are the advantages?
A guarantor loan increases your chance of successfully getting the loan you need and allows you to built up your credit rating in the process. Loans can be arranged quickly and funds issues by the lender within 24 – 78 hours once your loan application has been completed and fully accepted by the lender.
Borrow up to £5,000 over up to 5 years with a homeowner guarantor*
Representative 48.9% APR (variable)
*Representative Example £3,000 over 3 years, representative 48.9% APR variable. Monthly payment £145.17. Annual interest rate 40.48% variable. Interest payable £2,226.12. Total repayable £5,226.12
Some of our new lenders are cheaper than our current lenders which is great news as more competition comes to the market place and lowers the interest rates being charged.
More competition and lenders in the market place means lower rates and fees for you!
What does this mean for our customers?
What this does is offer us a greater choice of lenders to choose from when finding our customers a lender who is willing to borrow them what they require. Greater choice means we can often approach more lenders to get you a better deal and a lower rate of interest on your loan.
Who do we currently have on our panel of lenders for amount of £200 and above?
We are adding more short term lenders who our panel as we grow our loans offering to include greater choice. Many of the lenders here also offer installment loans and guarantor loans aswell as the more traditional payday or short term style loan.
All of our loans are personal loans and are unsecured. This means when you take out a loan with us your are not at risk of losing your home or security like you are with some of the asset secured loans and homeowner loans that are secured against your family home. If you miss payments or fall behind with you loan committments then this would severley effect your credit rating and chances of getting a loan again in the future.
There is a huge demand for short term loans that can be paid out quickly or same day. Most of the popular online payday and short term lenders you’ll see advertsing online understand that if they wish to give what their customers need then that is to supply and issue their loans quickly, or instantly/same day as they are often advertised.
Who uses these types of loans?
Payday loans are generally used by folks who require a small loans from £200 to £1000 quickly and or in an emergency situation. For example, to pay for some unexpected costs, or cover some bills until their next payday. Therefore by the very nature of why these loans are taken out, it is very important that the lender is able to act quickly and to issue the loan when the borrower needs it.
A growing industry
More and more people have become reliant on these types of loans to get them through month to month. Most payday and short term lenders now allow their customers to request new loans online, via text and through mobile apps which makes the whole process quick and simple to access. Allmost all types of lenders have realised that they need to issue their loans fast in order to get the business, this includes installment lenders, short term loan providers and those who offer small loans with a guarantor in place.