As a result of the increasing popularity of instalment loans, there are currently many lenders in competition within the market. It is apparent that banks are lending less frequently so more people are turning to short term instalment loans as a solution to unforeseen circumstances and unexpected financial shortages. Short term instalment lenders offer loans which can be paid back over a short period of time in monthly instalments, rather than having to pay back the amount in full like so many payday lenders. These lenders are often scrutinised in the media for triggering debt spirals as once the borrower has repaid the full amount, they are often trapped and have to apply again. Instalment lenders allow for an amount to be borrowed, but then paid back in more realistic, monthly repayments, making repaying the loan more flexible and affordable.
Nowadays, being accepted for a loan at the bank is often difficult and time consuming. There is usually an abundance of paperwork involved and applications are more regularly subjected to manual underwriting processes, which means getting a loan decision can take days. Noticing this niche, short term instalment lenders have become competitive with the online loan lending market and are offering instalment loans which can be paid out within one hour. Consequently, online instalment lending is growing at a rapid rate.
There are currently close to 20 short term instalment lenders available on the market. Most of them have higher APRs than bank or building society loans. This does mean however than they are more likely to lend to those with a lower credit score, providing a solution to those who have searched other avenues without success. Instalment loans that span over a longer period of time often have lower interest rates. One of the most common instalment loans is that of a mortgage, which is also likely to have the lowest interest rates of any other loan. For most people, a mortgage is paid throughout a lifetime and very few ever pay it off in full. If they are successful in doing so, it has usually taken multiple years. For a large percentage of the population, it is simply unrealistic to buy a house outright, so a mortgage is the only solution. This highlights the importance of instalment lenders within our society.
It’s really important when you’re looking for an instalment lender that you choose a lender that is being responsible. It gives you peace of mind that you’re not going to be given a cash loan you can’t afford or be charged big fees without knowing. And remember, if your instalment lender is being responsible, don’t forget you should be too. Always give the absolute truth about what you earn and can afford. It is in your best interests and will ensure you are less likely to fall into financial hardship. Always make sure that if your circumstances change during the term of the loan, that you let the lender know so they can help you.
Before you take out any credit you need to ask yourself whether borrowing money is the right thing for you. If you can cut down on your spending or put off buying something until you’ve saved for it, do that. If you are borrowing money to make repayments on other loans and debts, you may be in a vicious circle and it might not be the best thing to do. If you think you need help with your debts, you can contact the Step Change Debt Charity service at www.stepchange.org.
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