Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk.
Representative Example: Amount of credit: £300 for 71 days. One total repayment of £470.40. Interest: £170.40. Interest rate: 292% pa (fixed). 1301.2% APR Representative.
If an unexpected bill lands on your doorstep or your car breaks down Depending on the amount you need and how you want to pay it back, a manageable instalment loan may be something to consider.
Here's a helpful guide for what you need to be aware of when it comes to instalment loans:
How does an instalment loan work?
In a nutshell, instalment loans work in exactly the same manner as any other variety of loan – you repay the amount you borrowed with the relevant interest. However, the main difference with instalment loans is that you repay over a series of repayment periods, in contrast to a typical payday loan which needs to be fully repaid on a specific date. Installment loans in the UK can last several years, although they can be paid off quicker depending on your agreement.
Who are instalment loans best suited to?
Typically monthly instalment loans are for larger sums. For example, most mortgages or car loans tend to be instalment loans that are paid monthly. However, people should make sure that taking a loan is the right move for their financial situation.
What sort of interest rates are charged?
The interest rate on instalment loans tends to be lower than those on a short-term loan due to differences between the two. However, due to the higher values and longer timescales involved with an instalment loan, you will typically end up paying a larger amount of interest than you would if you took out the same amount for a shorter term. A monthly instalment loan rate is decided by a variety of factors set by the direct lenders, including the amount you are borrowing, the period of time, your income and your credit rating.
How do you pay an instalment loan back?
This is completely down to the person borrowing the money – you need to ensure the payment schedule is realistically suitable to your income and lifestyle. You can pick how long you want the loan repayments to last and which days the money will be taken from your account (on your payday, for example). There is no point promising payments you are physically capable of signing but in reality unable to deliver on, so being wise with your budget is very important.
When is a short-term loan more suitable?
Take a step back from the situation and ask yourself: "How much money do I really need to borrow – and when can I realistically pay it back by?" If you require a larger sum, your best option is a monthly instalment loan. However, if you need £1,000 or less and can commit to repaying the full amount in one payment, including interest, then you may want to consider a short-term option.
Why use QuickQuid for a short-term loan?
Here at QuickQuid, we can lend first-time borrowers up to £1,000 (and existing customers may be able to borrow up to £1,500) over three repayment periods, if approved.† We accept applications from people who have less-than-perfect credit, but we run preliminary credit and affordability checks to ensure that we are lending responsibly, and that you can repay the loan.
We offer an unsecured loan, unlike some banks and other lenders – meaning we don't require collateral against the money you are borrowing. Additionally, there's no need for a guarantor, QuickQuid's short-term loans may help you cover an urgent and unexpected expense.