In the world of finance and borrowing, there are a myriad of types of loan available to you depending on whether you are an individual, a group, a
consortium, a business, a fledgling enterprise or simply a speculator. However each and every one of these loans has one single thing in common, they have to be repaid in one form or another.
Instalment loans are usually taken out by a borrower who has an urgent need for money but who will not be able to repay it all for a few months.
Now this differs from what are popularly known as payday loans, and do so in one principal way – you repay a payday loan in full in one payment.
An instalment loan comprises a number of equal monthly payments, which usually depend on the length of the loan agreed.
As an example, let’s say your washing machine has broken down and you need a new one. There is a special deal on at the local electrical store and you need £500. However not only do you not have £500 to spare at the moment but you won’t be able to pay that sort of money back in one go. You will need time to save up.
Well that is the advantage of an instalment loan as, to a degree, it allows you time to ‘save up’ to repay the loan (with some interest to be paid on top of the loan amount), but instead of making one large repayment after say a year of saving, you can make 12 smaller payments, once a month over that period. Now this form of loan repayment has a number of advantages over a payday loan, even if the size is the same.
Firstly you don’t have to panic when you get your next pay cheque, wondering how you can pay back the £500. Instead you may have agreed to pay back £50.00 a month which you can more easily afford and are less likely to miss from your pay packet.
Secondly, with instalment loans, interest rates tend to be appreciably lower than loan rates charged for payday loans. At the end of the day you want to pay back as little interest as possible and taking out an instalment loan is one way of doing this.
Thirdly, with an instalment loan you can build up a bit of credit history so each time you take out a loan and successfully pay it back, then lenders should recognise this as positive behaviour and you may be able to obtain a slightly larger loan the next time you need one. Instalment loans are an excellent way to building up a lender’s confidence and if you ever need to step up to the ultimate instalment loan, a mortgage, if you have an unblemished credit history, then you may find it less of a struggle to get accepted to borrow such a large sum of money.
Instalment loans are the types of loan this country has been built on and which comprise the greatest part of UK borrowing, which currently runs at over £1.5 trillion! So if you are a business and you want to promote instalment loans by partnering with Nouveau Finance, then make sure you give us a call.