Sometimes life can throw you a few nasty surprises, with unexpected expenses or big one-off payments meaning you suddenly need to find ready cash. That’s where instalment loans come in. Most people take out an instalment loan when they need to cover a one-off expense and want to repay the money in manageable amounts over a fixed term. Put simply, you choose the amount you wish to borrow and the time scale over which you want to repay it, meaning you only borrow what you need and only pay back what you can afford.
For many people, instalment loans are a good way of bridging the financial gap when you need instant access to a lump sum. Rather than having to pay back your loan in one go, instalment loans allow you to spread the cost over a fixed period. That means you keep control of the purse strings and don’t over-burden yourself with debt, instead repaying your loan in manageable increments.
What are Instalment loans?
Instalment loans are a form of short-term borrowing, which enable you to cover unexpected or one-off expenses. From the car suddenly breaking down to a burst pipe in winter, we all face surprise bills now and then. Sometimes it can be hard to find the ready cash to cover them, but instalment loans can be a good way to get the money you need quickly.
Unlike payday loans which require you to pay a lump sum at the end of the agreed borrowing period, instalment loans do exactly what is said on the tin. With instalment loans, UK customers pay them back incrementally, with regular monthly payments of an agreed amount. You simply choose how much you can repay each month and how many months you wish to spread the cost over, meaning you have more control over managing your repayment plan.
Interest rates will vary depending on the amount you have chosen to borrow and the length of time you’re repaying it. Your monthly payment with interest will be calculated when you apply, as will the final sum you need to repay. This gives you a much clearer picture of how you can plan your finances and budget while you are repaying your loan.
What do I need to apply for an instalment loan today?
It’s very easy to get started in applying for an instalment loan. As a responsible lender, we look after our customers by always carrying out credit and affordability checks. This is to ensure you’re not going to get into financial difficulties by taking out an instalment loan, but they’re nothing to worry about. These checks are as much for your protection as our own, because we need to be confident you aren’t overstretching yourself.
As part of our credit checks, we will look into your previous loans and how you might have handled credit in the past. Affordability checks give us a clearer idea of whether you’ll be able to afford the monthly repayments you have requested, simply to ensure you’re not going to be overburdened financially. These checks are carried out on both new and existing customers, and if you’ve had a loan from us before, you may be eligible for a higher borrowing limit.
How much interest could I pay on an instalment loan?
There’s no single answer to that question. The amount you pay in interest on your instalment loan will depend on how much you have borrowed and the length of time you wish to take in paying it off. Our interest rates are fixed by amount, but you can use our handy online calculator tool to see how much you can expect to pay in interest.
We believe in treating our customers fairly, which is why we charge only reasonable interest rates for this type of financial product. The interest rate attached to your loan and the final sum you will pay are calculated by us when you apply, giving you a much better idea of how you will need to budget in the coming months. If you need more information on interest rates or want more help in deciding the borrowing amount which is right for you, our expert team of financial advisors are always on hand to offer guidance.
Just to give you some idea of how much you might repay in interest, here are a couple of representative examples.
If you were to borrow £300 and pay it back over the course of three months at a rate of 292% p.a., you would be asked to pay £153.63 per month. The final sum you would pay would come in at £460.89 in total.
If you were to borrow £400 and pay it back over six months at a rate of 80.98%, you would repay £120.65 per month. The final sum when borrowing this amount would come to £723.91.
The overall amount you pay each month will be dictated by the sum you have borrowed and the length of your repayment plan, and will be calculated when you apply for your instalment loan. If you need further advice and guidance on interest rates and the options available to you, you can always contact our financial advice team for support.