Both instalment loans and short-term loans have their benefits for borrowers. It is important that you learn as much as possible about these different types of loans before choosing which one to apply for. Selecting the right loan product will ensure that you get exactly what you need without any unnecessary hassle. The more time you spend learning about these loan options, the better off you will be financially.
Short-term loans, otherwise known as payday or cash advance loans, are given out in amounts that vary from £200 to over £1,000. These loans usually have a term of two to four weeks, depending on the lender and amount that is borrowed. You can get a short-term loan from a bank or credit union, though private lenders have been dominating this loan product for a while now.
Some of the benefits associated with short-term loans include:
• Easy to get: Short-term payday loans tend to be very easy for a majority of people to get, even those with bad credit. As long as you have a stable job and adequate income, approval shouldn’t be an issue.
• They are fast: There is no question that short-term loans can help you get the money you need quickly. If you have some emergency expense you need to cover, a short-term loan is a great option.
• Convenience: The sheer convenience that these loans offer is also worth considering. There are lots of brick-and-mortar businesses that give out payday loans, but you can also apply online. This means that you can get the loan you need without ever taking a step out your front door. The whole process is very easy and simple.
• Lender options: There are tons of private lenders that you can get a short-term loan from, so you are bound to find one that can help you out.
A few of the drawbacks associated with short-term loans include:
• Higher rates: A lot of people who opt for short-term loans end up paying higher interest rates. This is simply the price you have to pay for a quick and convenient loan.
• Scammers: There are a lot of reputable private lenders that give out short-term loans, but there are also quite a few scammers. It is important that you are aware of this so you don’t get taken advantage of.
Who Should get a Short-Term Loan?
Those who need money right away for something important should think about getting a short-term or payday loan. These loans are given out very quickly and easily to most people. Whether you need to cover some home repairs or some other crucial expense, this is an excellent borrowing option. These loans are also a great choice if you have bad credit. A lot of private lenders do run credit checks on applicants, but you certainly don’t need a high credit rating to get approved.
Unlike short-term loans, instalment loans are given out in larger amounts over longer periods of time. Some of these loans have a term of a few months while others can stretch out over years. It all depends on the amount you borrow. Interest rates on these loans tend to be lower than short-term loans. A majority of loans are considered instalment loans, including mortgages and car loans. If you need to borrow a larger sum of money over a longer period of time, you will most likely need to apply for an instalment loan.
Some of the biggest benefits offered by instalment loans include:
• Fixed rates: The fixed interest rates that are closely associated with instalment loans will make your monthly payments very predictable. While you can sometimes opt for an adjustable rate for your loan, it is subject to change over time.
• Longer payback periods: With an instalment loan you will have longer to pay back the money you borrow. This will take some of the stress out of borrowing.
• Quick and easy: It usually doesn’t take very long to get the money you need with an instalment loan. You can choose to have the money transferred right into your bank account if you are approved.
Some of the drawbacks of instalment loans include:
• Potentially high rates: The interest rates on long-term loans are sometimes high, but not nearly as high as with short-term loans. The more time you take to find the right lender, the better your rate is going to be.
• Penalties: There are penalties for missed payments on most instalment loans. These penalties can cost you quite a bit extra if you fail to make your payments on time.
• Collateral: Often times collateral is required to get an instalment loan. The property you use as collateral will be taken by the lender to pay the remainder of the loan if you default on it.
Who Should get an Instalment Loan?
Instalments loans are best for those who need to borrow a large amount of money for something like a new house or car. You will have a lot longer to pay off the money you borrow. If you need to borrow from than a few hundred pounds, you should definitely consider getting this type of loan. You don’t need to have perfect credit, but a high credit rating certainly helps.
There are many different kinds of loans to choose from, so you will need to consider your specific needs before making a decision. Instalment loans and short-term loans both have a lot to offer, but you will have to choose the option that works best for your situation. Make sure that you also take enough time to find a good lender that is flexible and willing to work with you. You can get both types of loans from many different lenders, and it’s important to do your research before making a decision. Either way you should go online to apply because of how easy and convenient it is to do so.