What Is An Instalment Loan?
Instalment loans are a type of short term loan. Unlike a payday loan which is repaid in one lump sum, an instalment loan is repaid in set amounts over a longer period, usually a few months. This means that if you need a larger amount for your unexpected expense, an instalment loan can be more manageable to repay.
Instalment loans, like payday loans, are intended to cover any unforeseen expenses. As in these sorts of situation you’ll likely need quick cash, instalment loans are typically paid out the same day you apply. PiggyBank aims to pay out funds within an hour of approval.
If you feel you have a poor credit history, instalment loans can be an option to borrow funds where you may not be eligible for more conventional forms of credit, like bank loans. Paying back early or ontime can also help you improve your credit score and add to your credit footprint.
Instalment loans are usually a better choice if the amount you are borrowing would be difficult to pay back in one lump sum. An example of a large instalment loan is a mortgage, which for most people would be impossible to pay all at once. A short term instalment loan is taken over the period of months rather than years.
What’s The Difference Between An Instalment Loan And A Payday Loan?
If you’re looking into short term credit, you may be considering a payday or instalment loan. Payday loans are usually for smaller expenses, as if you were to borrow a large amount and then repay it on your payday, this might make it difficult to manage your other finances. With a PiggyBank payday loan, you borrow between £100 and £400, for up to 35 days. The funds are intended for emergency expenses like paying for a car repair, that you wouldn’t be able to afford until payday. We can help you get the funds you need, and in that situation, get to work.
Instalment loans are usually larger sums of money - things like car loans or mortgages. In the shorter term, you can typically borrow up to £1000 with an instalment loan. At PiggyBank, we offer instalment loans between £150 and £1000, though if you are a returning customer, you may be eligible for up to £1500.
The daily interest is the same for both our payday and instalment loans - 0.8%. As interest is applied daily, making early repayments, or any partial payments with an instalment loan can save you money in interest. Unlike with some loans, we won’t charge you for making any early payments.
What Are The Benefits Of An Instalment Loan?
Those with good credit history may be able to apply for more traditional forms of credit, which can be a good option if you have a much larger expense. The Money Saving Expert website can offer advice if you need to borrow up to £25,000. If you’re looking for a smaller amount though, banks don’t tend to offer small loans, so you could end up borrowing more than you need and paying more in interest. Bank overdrafts can also end up costing you more in the long run with any overdraft fees you could be charged.
Most short term instalment loans are incredibly flexible - you can usually go up in £10 increments, so you can borrow the exact amount you need. All short term lenders will also tell you how much you’ll be repaying and when, so there are no nasty surprises.
You may also consider a credit card if you need short term credit, as these can sometimes work out cheaper than a loan - you can find out more here. This is usually only the case if you have a good credit history though. If you have bad credit, the credit cards you may be eligible for could charge more in interest and fees.
If you don’t have the savings to cover an unexpected expense, there is also the option of asking to borrow money from family and friends, though few people do this. It can be embarrassing to discuss money with your friends and family, and they might not have the funds to lend you, even if they want to help. The quickest solution for an emergency loan is a payday or instalment loan. With most lenders, such as PiggyBank, you’d expect to have the funds in your account within an hour of approval.
Instalment loans can also be a good solution for those with a poor credit history. You may not be eligible for larger amounts through bank loans or credit cards. With a PiggyBank instalment loan, you can borrow between £150 and £1000, and making early payments or paying on time can help you build up your credit score.
You may have heard of ‘no credit check’ loans, which sometimes give payday and instalment loans a bad reputation. At PiggyBank, we don’t offer no credit check loans, as we make sure we are always lending responsibly - if lending to you would put you into financial difficulty, we won’t do so. If you think that you need to speak to someone about your financial situation, you can get help and advice from companies such as the Citizens Advice Bureau. They can also refer you to more specialist third parties if necessary.
Can You Apply For An Instalment Loan With Bad Credit?
You might have bad credit if, for example, you weren’t able to pay your bills on time, or missed a credit card payment. Your credit file has information from the last 6 years, so this might not have been recent, but could still hold you back when it comes to taking out credit.
You may also have a poor credit rating if you have a ‘thin credit file’. This means that you haven’t taken out much, or any, credit previously, so lenders can’t see how well you handle credit by looking at your credit history. Sometimes this can be as bad as a poor credit history when it comes to taking out loans. With this sort of catch-22 situation, we’ll do our best to help, looking at things other than your credit file - we consider each application individually.
Some short term lenders won’t consider your application if you have poor credit, but at PiggyBank, we understand that perfect credit files don’t really exist. We won’t just look at your credit file when making a loan decision - we will also take into account things like how recent any negative marks on your credit file are, as well as your income and expenditure information. We won’t penalise you for payments that could have been missed years ago.
You can find out more about your credit rating through websites like Noddle - they’ll let you know your credit rating for free. The higher the score, the better your credit rating.
As with a payday loan, it’s important to check if you are working with a direct lender and not a broker. As a direct lender, PiggyBank would lend you money directly. A broker passes on your details to direct lenders so that they can offer you a loan. It can also be helpful to check if the lender is UK based - if they are, they will need to adhere to FCA guidelines. PiggyBank is completely UK based, from our Underwriting team to our call-centre.
Sites like Money Guru can also help you compare direct lenders. It’s important to consider what other people are saying about each lenders - looking at reviews can be helpful when choosing a lender.
When looking at short term loans, you may look into bad credit instalment loans. A lot of people believe that they have poor credit, but this doesn’t necessarily prevent them from applying for a loan. You don’t need a perfect credit score to apply for a PiggyBank loan, the loan just has to be affordable. As a responsible lender, PiggyBank will make sure that you can afford to pay back the loan. This can be more manageable with an instalment loan, as the payments are spread over up to 5 months.
Legislation has also been put in place over the last few years to mean that any UK based short term lender like PiggyBank has to lend responsibly and a limit was placed on interest. We are proud to be the first such lender to be fully authorised by the Financial Ombudsman Service (FOS).
Short term lenders can only ever charge fees totalling to £15 and no more than 0.8% in daily interest. You’ll also never have to pay back more than twice what you borrow. Before you take out a short term loan, or even sign the agreement, the lender additionally has to tell you when you’ll be making your repayments, how much they’ll be, and the total to repay.
Before you take out a loan, you do need to ask yourself if it is the best option. Long term financial difficulty should not be a reason for taking out short term credit - this can lead to a debt spiral of more and more borrowing. Credit should also never be used to pay back other credit, as it can lead to similar issues. Companies such as Step Change can offer free impartial advice, if you wish to discuss your debts or finances.
What is APR?
The Annual Percentage Rate (APR) is the interest you would pay if you took a loan out for a year. It is a legal requirement for short term lenders to tell you their APR. It can look like a lot of interest, but as short term instalment loans are not usually taken out over a year, you would not be paying a year’s worth of interest. PiggyBank loans have an interest rate of 0.8% per day for every £100 you borrow. You can also save on interest by paying back early.
What is a PiggyBank Instalment Loan?
With a PiggyBank instalment loan, you can borrow £150 to £1000, over 2 to 5 months. We also have the option of paying weekly, fortnightly or four-weekly. If you are looking for a shorter loan, or don’t need to borrow as much, you can look at our payday loans.
We aim to pay out all approved loans within an hour. Once you have completed our simple application, we conduct credit and affordability checks, and will give you a loan decision. If you want to find out more about these checks and how we make sure we are lending responsibly, you can look at our eligibility page.
How Would You Repay Your Instalment Loan?
You can choose to repay your instalment loan over 2 to 5 months, though you can make weekly, fortnightly, four-weekly or monthly payments - whichever is best for you.
Your payment will automatically be collected via the Continuous Payment Authority - we don’t collect by Direct Debit. If you’d rather pay by bank transfer though, just get in touch to ask for our details.
If the unexpected happens, and you’re not able to make your agreed payment, we’re here to help no matter what. You can call us on freephone 0800 206 1560 or email firstname.lastname@example.org, and we’ll discuss your options with you.Apply Now!