A long repayment duration, a higher possible loan and an efficient application – these are some of the most appealing benefits when it comes to instalment loans. At the same time, there are even more benefits for people who find it difficult to save up for one time payments. Instead, they would rather pay more with the interest rates and monthly payments in the long run, but less on a monthly basis.
Instalment loans come as a general term. Practically, there are more types of instalment loans and each of them comes with its own specifications. Here are some of the most popular types of instalment loans you can normally benefit from.
Mortgage Instalment Loans
A mortgage involves buying a home over a long period of time. Normally, British banks can provide mortgages between 15 and 25 years of repayment, but different rules apply, as well as customers with unique needs and financial situations. The repayment time can be both shorter and longer – it may even exceed 30 years.
Different mortgages come with different requirements and rules. Some of them may have a fixed interest rate, while others come with variable rates. Monthly payments are usually set, but then again, they can increase or decrease. Usually, they are less likely to change.
Automotive Instalment Loans
If a mortgage is suitable to buy a house, an auto instalment loan is suitable for cars. You might find it difficult to save £25,000 for a new car. Even if you want to buy an old used car, spending £1,000 or £5,000 in one go could be difficult. You may not really want to play with your savings – unexpected situations may arise later on as well.
From this point of view, an auto loan is usually paid within 12 to 96 months. Different lenders come with different rules though. Unlike most expectations, these loans are different from other types in terms of interest rates. If you opt for a long term repayment, your interest rate might be smaller than if you choose a short repayment plan.
Payday Instalment Loans
Payday loans used to be paid in one go. They were designed for one month only – the day you got paid or shortly after. Things have changed a little in the last years, meaning payday loans are no longer one time payments. Instead, you can opt for a few months. You are less likely to get more than six months anyway and it also depends on how much money you need.
Unlike other types of loans, these cash loans come with a higher interest rate. They are fully regulated by the FCA now, so there is not much to be worried about in terms of fees and charges.
Personal Instalment Loans
Personal instalment loans are used for a plethora of different purposes. You might end up with a major car repair that cannot be delayed. Perhaps you have to consolidate a debt or maybe you have some sudden bills.
These loans are normally given for a few years. They have a higher interest rate because lenders do not need collaterals.
As a short final conclusion, instalment loans can be quite diversified. No matter what kind of loan you get or what you need it for, it becomes an instalment loan if you repay it in two or more goes. While one time payments might be more efficient from a financial point of view, it is in human nature to opt for more smaller payments. It is just better for your peace of mind to know that you will not have to pay huge chunks of money in single payments.