The world runs on money. Even if money cannot buy happiness, it can get you a Mercedes. And no one drives a Mercedes unhappily. You study so that you can get a job, and earn decent amount of money. You earn money to shop, travel, eat, provide and survive. Countries have been known to go to war for money. In short, the centre and purpose of everything is MONEY.
The Dilemma to Choose
Now the question is, what do you do when you do not have enough to pay for necessities?
Do you borrow from a friend, take an installment loans, or visit the pawnshop?
Let us consider all the three options:
- When you decide on borrowing from a friend, there is a possibility that you might not be able to get the whole amount you needed. What happens when your friend suddenly asks you to return the money, and you do not have the entire amount that time?
- You can take an installment loan from a bank or an online lender, and promise to pay monthly in small amounts with some rate of interest. This might solve your financial issue, though you would be liable into paying a fixed amount every month till the repayment period.
- Visiting a pawnshop is also an interesting option, where you would be lent money in exchange for mortgaging some precious thing of yours. The catch here is that you will have to pay the entire amount back in one go in order to get your mortgage back. And if you are unable to collect the whole amount within the set period of time, you would lose that precious thing. Won’t that be heartbreaking?
Let us dwell more into the smarter option
In technical terms,
“An installment loan is a loan borrowed on the condition of repaying the loan in a fixed number of scheduled payments, which have to be made within a decided amount of time.”
You can avail this loan to pay for your college fees, car loan, student loan, medical bills, or any other expense that you find yourself struggling with. After carefully examining your finances and expenses, you can decide what amount you can spare each month. This helps you finalise your monthly installment, and the repayment period for the loan that you take.
Your Credit and Period
Your credit score comes into play when you go out to borrow money. A good credit score will get you a decent rate of interest and principle amount. The traditional sources will easily lend money to you, and you would have comfortable monthly installments to pay.
A bad credit score would lead you to apply to the online direct lenders or agencies, which is also a convenient option nowadays in the UK market. Keep in mind that the loan amount offered might be less there, and interest rate a bit high.
The repayment period is decided mutually by you and your lender, depending upon your financial reliability and stability. One example can be a 6 month loans, where you pay off the loan amount along with the interest charges in 6 equal monthly payments. Installment plans can have repayment periods varying from a few weeks to a few years, largely depending upon the loan amount and source of borrowing.
To secure, or not to secure, that is the question
The installment loans come in secured and unsecured formats. Your affordability and eligibility decide which format you can opt for.
The secured loans are offered by established institutions, and follow due procedures of a loan. Your credit history, finances, and current employment status, all are taken into consideration. It is required of you to provide a mortgage or a guarantor as a security in order to get an approval for a secured installment loan. The amount offered is higher than the unsecured counterpart, the interest is lower and duration of repayment period is in direct proportion to the amount. Bad credit score and unavailability of financial stability, or mortgage draws you out of applying for a secured loan.
In complete contrast, online direct lenders offer unsecured installment loans, at higher rates of interest and for shorter periods of time. The loan amount is not that high which gives you the freedom of not submitting any security or mortgage. They are hassle free to apply for, conveniently available and do not have any cumbersome procedures to follow. They are easy, but expensive loans.
The Competitors
Comparison always helps us to see and choose better. You have alternative loans in the market that you can avail instead of installment loans, but each of them comes with some drawback:
- Payday Loans- These are short-term high-cost loans that can be availed via mobile text or any website. The approval usually comes within minutes of application, and amount is credited in your account within other few minutes. You are bound to pay back the loan the day you receive your next pay cheque, along with a huge interest. The setback of this loan lies behind the low amount of the loan, and the high rate of interest.
- Credit Cards- Whereas the installment loans allow you to repay with repeated payments, you are restricted to pay the credit card bill in one big transaction and that too within the month. Failure to pay the full amount attracts high percentage of interest on the balance amount, and penalty charges too. Credit cards cannot be an answer for your huge bills that you cannot afford to pay back in one go.
Check-Points
Installment loans are a convenient and planned investment. Before going to the bank, or a direct lender, study what is available to suit your needs, and research on these important check-points before signing the loan agreement:
- Total cost after adding interest to the principle
- Time you need to payback the total amount
- Frequency and manageable installment amount
- Time in which the amount will be disbursed to you
- Additional fees, or restrictions
The above points help you proceed towards a stress-free and convenient loan repayment process. While the money will promote your financial well-being and solve your need for that extra cash, the installments would not prove to be a burden on you. As an added advantage, your credit history will be enhanced on the go. That implies easier borrowings in the future!
Description: Installment loans are the answer to your financial emergencies. They come with a repayment schedule of your choosing in a fuss-free and controlled environment, and they are all about your comfort.
