UK Loans and Lending Advice – Your one stop guide to personal finance.

There are lots of different types of loans available and if you are thinking of borrowing money then it is worth making sure that you are picking the right type of loan for your needs. Find out about the different types of loans and then you will be in a better position to be able to pick the one that is best for you. There are some loans which you will probably know a lot about and some that you will know less about. Instalment loans are a type of loan that you might not know very much about and it is worth knowing more about them. Then you will be able to decide whether it could be a loan that will suit your needs.

What is an instalment loan?

An instalment loans is a short-term loan where you will borrow just a small amount of money. They are similar to payday loans in this sense, but you do not have to repay them all in one lump sum, but you can repay in instalments. This means that the repayment is easier compared with having to find the money all in one go. It is more likely that the repayments will be able to be made as well, which means that you are less likely to have to pay extra fees or charges. The loan does last longer, as you will not have to repay it in a few weeks, but if it means that you can manage your finances more easily as a result, then it is worth it. These loans can be organised quickly and they are available to most people, even those with a poor credit record.

What are they for?

They can be organised quickly and therefore will often be used for emergency purchases. This would be things like bills which need to be paid, replacing broken items quickly or paying for food for your family if you run out of money. As the money will be with you really quickly it means that you will have it available to cover those expenses almost as soon as you need it. This can be really beneficial, especially if you are at risk of having your electricity cut off, need to feed your children or need to buy a new fridge. However, it is worth noting that there is no check on what you are using the money for. You do not have to specify this so you can use it for anything you wish to. There are a few loans, such as a mortgage where the money has to be used for a specific purpose, but this type of loan is not one of them. Therefore, although they are designed for emergency use, they can actually be used for anything at all.

Who are they for?

The loans are designed for anyone but as they are available for those with a low credit score it tends to be these people that really use them the most. This is because they are limited in the amount of loans that they can choose from and therefore will have less to pick from. Those with a better credit score may choose a more conventional loan form their own bank as they may find that more convenient or they may decide to use an overdraft or credit card because they have already got these arranged.

Instalment loans are also easier for those people that do not have a large income. If you choose a payday loan instead then you could find it tricky because you will have to repay the whole balance in one go. The instalment loan allows you to repay over a series of months and this can be a lot easier, especially if you are borrowing larger amounts of money. Trying to find a large lump sum can be tricky for many people and so by breaking the repayments down into more manageable sizes this will be helpful for many people.

Whether this type of loan is the best one for you will very much depend on your situation. It will depend on how much you need to borrow, how much you can afford to repay and how quickly you need the money as well as your credit rating. It is worth thinking about what options are available to you because of your situation and then you will be able to match the right loan to that situation. You will need to think hard about what different loans will offer you as well as comparing them on price as it is important to think about the value for money that you will get from it. It can sometimes be worth paying more money for something if it means that you will get a better service, get it more quickly, find it easier to repay or whatever. So, do not just compare on price but look at other features as well.

Many people do not have a good credit record and are looking or ways to improve it. There are things that you can do and you might consider that taking out a guarantor loan might be a way to help. It is worth making sure that you know what a credit record is and how it works, what a guarantor works and then you can decide whether it is the right thing for you to try in order to improve your credit record.

What is a credit record?

A credit record is simply information about your credit worthiness. It will contain all sorts of information about your personal finances. For example, it will have details of the loans that you have as well as the regular payments that you make. This will include things like contracts for mobile phones, utility bills and even rent payments. It will therefore have details of any payments that you may have missed. It will also have salary details.

A potential lender will look at this information and use it to judge whether they feel they would trust you in repaying money that they lent to you. For example, if you have got a small loan and you are repaying it and you are managing to repay all your bills as well, then they are likely to lend to you if they feel that you salary is high enough to cope. However, if you have missed repayments on loans and are self-employed with a variable salary then they may decide that it is risky to lend to you. If you have had no loans before and do not make regular payments then they will not be able to judge how you might cope with a loan.

What is a guarantor loan?

A guarantor loan is available for those people with a poor credit record that cannot borrow large sums of money elsewhere. The loans are given to anyone even with a poor credit record as long as they can provide a guarantor who is a person who has a good credit record that will be willing to cover any loan repayments that cannot be met by the borrower. It can be a useful way to borrow larger sums of money, especially if you do have a poor credit record or are worried that you might not be able to afford all of the repayments on the loan. You will need to think about who to use for a guarantor as you will need to find someone that will be willing to help you out, can afford the repayments and has a good credit record. IT is most likely that this would nee dto be a family member.

Will a guarantor loan help my credit record?

It is often thought that if you can take out a loan and then prove that you can make the repayments, it will mean that you improve your credit record and you will therefore be more able to borrow money in the future. However, it is worth noting that all lenders have different criteria when they are looking at your credit record. It is sometimes thought that everyone has a credit score and that if they improve that they will be able to borrow more. However, this is not the case, lenders will just have a look at your finance history and use their own criteria for determining whether they will lend to you. It is not always possible to find out what these are either. It is even the case that some will like it if you have missed a few loan repayments as they will hope that you will do this when you borrow form them and they will make more money form you in charges. Whether or not this is true though is difficult to say.

Using any loan to try to improve your credit record is always a risk. If you happen to not be able to make a repayment on the loan, then it will have the opposite effect and make your credit record worse. Even if you have a guarantor covering those repayments it will still show up as you not paying and so it will work against you. A way to ensure this des not happen is to have an arrangement with the guarantor that they give money to you if you know you will be short when a repayment is due and then you pay it. Then it will look like you have managed all of the repayments and this will work in your favour. This could be complicated to set up though and you would need to be happy to ask your guarantor for money when you needed it and they would need to be able to provide it really quickly for you.

Our Blog

Are Instalment Loans the Best Type of Loan for me?

Will Using Guarantor Loans Help my Credit Record?

Recent Posts

Recent Comments