What are Long Term Instalment Loans?
Long term instalment loans are loans that you take out and pay in multiple instalments. This can be a great type of financial product for the right type of borrower but it’s important to know precisely what you’re getting and what your other options are before you go ahead and commit yourself.
Long term instalment loans are loans that are in many ways similar to a payday loan. That is to say that it normally involves a relatively smaller sum of money and will be paid back over a shorter amount of time compared with a regular bank loan or business loan.
That means that there are fewer hurdles to getting the money. Once you have passed the few necessary checks, the money will be credited very quickly into your account and you’ll be able to start spending it. In both cases though, you pay a cost for this in the form of higher rates. It’s then your job to make sure that you pay the loan back quickly and normally this will be after you have been paid (hence the term ‘payday loan’).
The difference between these two financial products though, is that payday loans need to be paid off in one sum. Conversely, long term instalment loans will be paid back in a series of smaller payments.
Whereas a payday loan will typically have an APR of up to 400%, long term instalment loans will have a slightly lower APR of around 50-60%. This means that you can get larger amounts of money and still be able to afford to pay them back.
Pros and Cons of Long Term Instalment Loans
Long term instalment loans are the right choice for you if you need money quickly and with minimal checks. If you don’t have the time or a good enough credit score to apply for a standard loan and if you only need a relatively small amount of cash – perhaps to pay for a broken boiler or to make rent. In these cases, you can choose between long term instalment loans or payday loans – and of course the former makes sense when you need slightly more cash for a slightly longer period.
Another advantage of long term instalment loans is that they enable you to make multiple repayments, which in turn means that you can help to repair a bad credit score. By making lots of small payments, you are demonstrating your ability to meet repayment deadlines and to pay back the money you owe. And as a result, you will your rating improve and become a better candidate for future loans.
If you need more money for a longer term though – such as to buy a car, start a business or renovate your home, then you should look into other financial packages that you can use to accomplish those things.
Whenever you take out any kind of loan, it’s always important to think long and hard about the type of loan you’re taking out and whether it’s the right option for your current situation and requirements.