It is often good to think about how certain loan types might benefit you. This is because you will need to know about the different types of loan if you are in a situation where you need to borrow money. It can be a good idea to therefore research all types of loan. It could be the case that you already know about some, perhaps because you have used them or your parents did or they are just well-known loans. With instalment loans, you may find that you are less sure about how they work. This could be because they are fairly new, not so well-known or you have not used them before. It is a good idea to know the main features of them so that you can decide if they seem like they will work for you.
- No credit check – although strictly speaking, all lenders do a credit check, it is done differently with these loans. This is because most lenders will look at the credit report and check to see how much risk they are taking on. They will look to see if the potential borrower looks trustworthy by looking at whether they feel they will be able to repay the loan. If they can see evidence that they have repaid loans before, not missed repayments in the past or make regular repayments and have an income, then they will lend to them. However, if they feel that they cannot be trusted then not only will they not lend to them, but it will show on the credit report that they have been turned down. With instalment loans, there is no credit check like this. The lender will do a soft credit check and therefore will not leave a trace on the persons credit record so no one will know they looked. Also they will not look for the same things and will not be worried about whether they have evidence they can repay as this is not important to them.
- Quick to arrange – instalment loans are usually quick to arrange as well. Lenders will often be prepared to help out people who need money in an emergency. This means that they will process the applications really quickly and it might even be possible for some people to have the money that they need in their account within a few hours. This can be a lot quicker than some other types of loan. Some loans can take weeks to arrange and if you are in an emergency situation you will just not be able to wait that long. You may even find that instalment lenders might be open overnight and at weekends so they will be able to provide money when other lenders cannot.
- Borrow small amounts – sometimes we only need a small amount of money. It is not always that easy to find a loan for a small amount though. It can sometimes be tempting to borrow more than you need because you want a bit of extra money to treat yourself. However, it will all need to be repaid and if you borrow a large amount this could be harder and it will take longer. Therefore, it could feel far less overwhelming if you borrow a smaller amount of money and you will be able to do this with an instalment loan.
- Repay in instalments – There are some types of loans, which are similar to instalment loans but have to be repaid in a lump sum. These are called payday loans. This can be difficult to manage if you owe a lot of money and if you have a lot of other payments that you also have to find the money for. Therefore, if you can spread the repayments over a few months, then it will be easier to afford everything that you need to pay for. If you cannot afford a repayment you will have to pay an extra fee and this will mean that the loan will be dearer, No one wants to have to do this and so if you spread the repayments, each will be smaller and easier to manage and the chances of you not being able to repay are much smaller.
So, once you know how instalment loans differ from other types of loans, you will be able to start to see how they may be able to help you. If you are in a situation where you have a poor credit record or where you need to borrow a small amount or where you need to get money quickly and you cannot afford to repay a large sum of money all at once, then they can be extremely useful for you. It is good to know they are available so when you do need money, you can decide whether they will suit you.