Bug-budget expenses are pretty uncommon, bite into a massive chunk of your savings. Even if you’re making this purchase to build an asset, tapping into your savings may not be a smart financial move. Instead of paying a lump sum upfront, borrow an instalment loan to spread the cost over a fixed span. Exhausting your savings could leave you in a credit crunch. Make your venture affordable with an instalment loan.
Read on to learn more about instalment loans and 5 ways to find yourself a suitable loan online.
What are instalment loans?
An instalment loan, usually short-term credit, provides you with the convenience of affordable monthly instalments. You can solve a multitude of purposes with an instalment loan – fund a big-ticket expense, settle an emergency medical bill or pay for car repair. An instalment loan helps you break-down the cost of your venture into smaller, reasonable monthly instalments, easing your financial burden.
Your credit score and income are two data points that majorly dictate the success of your application. They allow the lender to assess your creditworthiness and affordability, which are pivotal to the lender’s decision. Lenders usually take these factors into account while setting your interest rate. Your income, debt-to-income ratio, credit rating, and employment status are key focus areas in your application. These factors help them decide if the loan amount and term you applied for is justified. A strong application may fetch you up to £35,000.
How do instalment loans work?
Instalment loans facilitate big-budget purchases or ventures. You start by filling an online application form with details such as your address, employment history and income. Then, you can go on to fill in your desired loan term and amount. Some lenders are keen to know your loan’s purpose and how you plan to spend the funds. So, fill in the appropriate details and wait for the lender to assess your application. While the decisions are generally quick, some lenders may take a while to get back to you.
If your application gets approved, the lender will transfer the amount into your bank account. You’re then free to use the money as per your requirements; however, you should use credit responsibly. Once your repayment period begins, you’ll have to repay the loan via monthly instalments, until it’s paid off. Interest will be payable along with your monthly repayments.
It is essential to take all factors concerning your affordability into account, before signing a loan agreement. When you propose a loan term and amount, consider all possible scenarios that may lead to a default or delayed repayment. What if you lose your source of regular income? Will your savings suffice for the loan’s repayments? Having a contingency plan can help you sustain a financial turmoil.
Borrowing an amount that exceeds your affordability may cause you financial distress at the time of repayment. Paying off an excessive amount can be overwhelming. Plus, failing to keep up with the repayments can damage your credit score. Your lender may even take the legal course and get a CCJ issued against you. If they do so, not only will it lower your credit rating, it’ll also hamper your chances of securing credit in future.
5 Ways to Find a Suitable Instalment Loan
The internet has made all information accessible to us at the click of a button. Finding an instalment loan online is a pretty straightforward process. All you need to do is find the right platform to connect you with your ideal loan offer.
Here are 5 easy-to-follow ways to help you find a suitable instalment loan:
Check your eligibility: Instalment loan lenders assess your credit score and income before making a decision. This means that your credit profile will go through a credit check. Thus, it is better to self-examine your eligibility for a lender before making a formal application. You could save a lot of time and effort.
Compare loans offers: You’ll never know if you’re getting the lowest possible interest rate if you don’t explore the market. Instead of settling for the first offer that you get, compare offers from multiple lenders to find your ideal loan offer. Stop by 786 Loans to shop around for loan offers from multiple lenders.
Supply accurate information: Your details are the only way for the lender to know your identity. Fill the application form with the utmost attention and ensure that all your details are accurate. If you provide incorrect information, it may come across as an attempt to mislead the lender. It is better to spend extra time filling your application, rather than regretting it later.
Check if your lender is FCA authorized: Choosing the right lender is critical to the borrowing process. There are several lenders out there who are operating without the FCA’s authorization. You must run a background check on your lender to check their authorization. FCA’s official portal can give you access to your lender’s business information. It’s better to be safe than sorry.
Avoid multiple applications: Whenever you apply for a loan, the lender runs a credit check on your profile. A credit check can lower your credit score. However, this damage is temporary and can be compensated through future timely repayments. But it would help if you left healthy gaps between your applications. Instead of applying with multiple lenders through various application portals, use 786 Loan’s application form to compare multiple loan offers.
Tips to help you apply for an instalment loan
Here are some tips to help you apply and keep up with the repayments for your instalment loan:
- Self-assess your application, especially your credit score, before applying with a lender.
- Strictly adhere to your repayment schedule and try not to miss repayments.
- Thoroughly check your loan agreement for unsolicited charges. Also, check if your lender imposes a charge on the early settlement of the loan.
- Try and keep your repayment date close to the payday. This way, you’ll have an idea of how much you’ll be left with for the rest of the month.