Making Sense Of Money

Instalment Loans

Instalment Loans For Bad CreditInstalment loans can provide the same fast cash bad credit loans UK solution as a short term payday type loan. However, instead of having to repay the loan in full on the next payday, it allows the borrower to spread the repayments over an agreed period of time … sometimes a few months and up to a year.

Whilst instalment loans may often appear a more expensive way of borrowing when compared to payday loans, they could help avoid the payday loan trap that so many borrowers fall into. As a result they could actually save on the cost of borrowing for a great many people.

A traditional payday loan is designed to bridge the gap until the next payday. It’s specifically designed for those months when an unexpected cash flow problem hits for whatever reasons such as car maintenance, unexpected travel costs, heating repairs etc. Borrow a small sum of money, pay it back on payday and that’s it! However, what more and more people are finding is that they are taking out a payday loan to tide them over, paying it back and finding themselves short the following month. They then find themselves bridging the gap with another payday loan and hence falling into the start of the payday loans trap – relying on borrowed money each month.

    

An instalment loan provides the same solution for a cash flow problem. However, the big difference is that instead of paying back in one lump sum plus interest on a date to coincide with the next payday, repayments can be spread over an agreed period, several months or even years in some cases, thus minimising the monthly cash flow impact to the borrower and avoiding the dreaded monthly loan trap.

The typical duration of a payday loan is between 30 and 40 days, some companies will lend over a shorter period too, the actual repayment date will be set to coincide with payday. This is fine if your borrowing is a genuine one off and the full repayment of the loan is affordable without any need to plug another gap the following month. A typical short term instalment loan enables repayment to be spread over a 4, 6 or in some cases, 12 month period.

Costs will vary from lender to lender however all lenders are now required to display a representative example showing the interest rate, APR, total repayment cost and charge for credit which will enable the borrower to decide on the most cost effective solution for their own particular circumstance. A payday loan of £200 borrowed over a 30 day period may cost around £50 in interest and hence a payment of £250 needs to be paid back in full and in a single payment – do the same again the following month and the month after that £200 has now cost £150 and you’re still short of cash the following month! Interest rates on instalment loans may vary quite considerably as can repayment terms but these representative examples can be used to initially compare costs and to work out the best way of borrowing for each individual situation.

So, if you need a quick cash flow fix then it’s important that you look at the longer term implications of taking out a payday loan – think about the effect on cash flow the following month and the month after that and then consider the instalment loans for bad credit alternative … it could be cheaper in the long term.

Monthly Payday Loans – Instalment Loans In Disguise?

Posted by on 8:12 pm in Instalment Loans For Bad Credit | 0 comments

Monthly Payday Loans – Instalment Loans In Disguise?

These days it seems like there are more and more different types of loans and lending options all dressed up in fancy packaging and with names to match … none more so that monthly payday loans or 12 month payday loans. The thought of spreading the cost of a payday loan into monthly instalments is surely almost a contradiction in terms so just what are monthly payday loans – surely they are just instalment loans in disguise? First of all let’s decipher exactly what a standard payday loan actually is. Quite simply a payday loan is like an...

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Instalment Loans vs Payday Loans

Posted by on 9:38 am in Instalment Loans For Bad Credit | 0 comments

Instalment Loans vs Payday Loans

According to web definition an instalment loan is a loan that is repaid over an agreed period time via a set number of scheduled payments or instalments (normally at least two). The actual term of loan may be as little as a couple of months or as long as 30 years. That means that most “traditional” loans fall into the category of instalment loans –doorstep loans, personal loans, even mortgages are included. What it excludes are loans that are paid off in a single payment or open ended credit such as credit cards or overdrafts. These days...

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Instalment Loans To Avoid The Payday Loans Trap

Posted by on 9:21 pm in Instalment Loans For Bad Credit | 0 comments

Instalment Loans To Avoid The Payday Loans Trap

Whilst instalment loans may often appear a more expensive way of borrowing when compared to payday loans they could help avoid the payday loan trap that so many borrowers fall into and hence could actually save on the cost of borrowing for a great many people. A traditional payday loan is designed to bridge the gap until the next payday, it’s specifically designed for those months when an unexpected cash flow problem hits for whatever reasons such as car maintenance, unexpected travel costs, heating repairs etc. Borrow a small sum of...

read more
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