How to decide between a payday, instalment or logbook loan

Uncategorized / 26/08/2016
Happy young man shaking hands with salesperson at car showroom. Horizontal shot.

So you need some cash and in a hurry. There are many lenders out there, with many loan options. Sometimes, the waters can be a little muddy in terms of choosing the loan that is the right one for you.

In this article, we will take a look at three popular loan options and how to make a choice between them.

How much do you need to lend?

Start by determining how much you need to lend. Far too often, people actually over-lend. A lending institution offers them more money than they need and they accept. This generally means they waste money on things they do not need and then live with a far bigger instalment than they needed to.

It’s simple really. If you need a little bit of cash to see you through to the end of the month, then a payday loan is the best option. Just lend enough to help you to your next paycheck. Try to avoid a cycle of doing this every month, however.

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If you need a bigger amount of money, then consider an instalment loan. For example, your roof has developed a leak and you need £5000 to repair it. Here, an instalment loan paid over a period that will give you affordable monthly repayments is the best option. Try to pay off the loan as quickly as possible, especially if you have a bad credit rating. This will build up your credit rating in a positive manner.

Now if you own a vehicle and need a bigger amount, say £20 000, then a logbook loan is your best option. Here, the value of your vehicle helps to secure you a loan. The vehicle provides the collateral for the lender, so if you default, they have a legal right to repossess it. Again, this kind of loan has very flexible terms and is available to individuals with a bad credit rating.

How long do you want to repay it over?

Another factor in helping you determine which loan is best for you is repayment terms. As a rule of thumb, you should be trying to repay your loan as quickly as possible. When it comes to a quick payoff time, then a payday loan is a great option, especially for smaller values.

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Should you need more time to repay a bigger loan, then choose between an instalment loan and a logbook loan (but only if you can offer a vehicle as collateral).

What does the lender you have chosen specialise in?

Many people have taken out loans before with specific lenders. If they have treated you well, offer affordable loan options and have brilliant customer support, the chances are you will go back to them.

Many lenders however, specialise in certain types of loans. When needing a loan, you may then choose to opt for the loans they are experts in, especially if it fulfils the other needs highlighted above.

Perhaps the most important thing about taking out a loan is that you make an informed decision. This means taking the time to do some research, not only into which loan option is best for you, but also as to the best lender for you to enter into a contract with.

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12 month or instalment loans – What are the benefits?

Instalment Loans / 26/08/2016
Installment-loans-uk

It’s a fact of life, especially in the last decade or so. Many people in the United Kingdom are having to resort to loans to help them out in a financial crisis.

Unlike decades ago, people just do not save money for a rainy day anymore. And it’s not because they don’t want to. It has just become impossible. With the stock market crashes and the rising cost of living, there just is no money to save.

So what do you do when you need money in a hurry for an emergency? What happens when you need cash for an urgent medical procedure, your children’s education or even an unexpected death in the family?

Well, you make a loan, don’t you? Sometimes this is the only way you can secure the cash you need. Many people are making use of a range of unsecured loan products to help them out in these situations. These loans come in many forms including instalment loans (paid over monthly instalments for anything from 3 to 36 month, sometimes longer), payday loans (paid back when you receive your next pay check) or logbook loans (paid with monthly instalments but where your vehicle acts as collateral should you skip payments).

So what are the specific benefits of these loans?

Let’s take a closer look.

They offer loan options to people with bad credit ratings and bad debt

Many people in the United Kingdom have fallen into the clutches of bad debt. This is often through no fault of their own. A missed payment here, an unpaid account there – these things all lower our credit rating and eventually we fall into the bad debt trap.

So what does that mean? Well, once you have a bad credit rating, applying for something like a loan at a high street banking institution is nigh or impossible. They just won’t do business with you as it is not worth the risk.

Lenders that offer unsecured loans, be it a payday, instalment or logbook loan will, however. These loans will generally be at a far higher APR rating, meaning you will pay back more interest but let’s be honest, at least they are offering a loan and they have to make a profit. Don’t they?

They are flexible

Although a good lender will never agree to loan terms that will put you under immense financial pressure, you do have the option of very flexible repayments. Loan terms can differ greatly but obviously, the bigger loan you take out or are allowed to take out, the longer you will have to repay it over.

This ensures you can afford it, although it does mean that you will pay more interest over the length of the loan term. Of course, should you have any extra cash, you could pay it into the loan. For example, you receive an increase and decide that instead of using that each month for something else, you will increase the amount of your loan instalments. This will help you pay off the loan faster and save on interest.

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Can help people get their credit status back

Instalment loans are an excellent way for people who have bad credit ratings to begin to work on turning them around. By taking out such a loan and paying it back, without missing any payments you can help to build up a strong repayment history which in turn will start to push your credit rating in the right direction. Such a loan can also be used by people who have just started out in their careers to help build up a positive credit record and credit history.

You may have access to loyalty discounts

With many lenders offering instalment loans in the United Kingdom, it becomes difficult for them to compete and attract customers. Therefore, a large number of these lenders offer incentives and loyalty discounts should you pay off your loan timeously every month. These often take the form of lower interest rates for your next loan, larger sums of money lent to you as well as a host of other loan incentives. These are all normally backed up by exceptional customer service.

Instalment loans offer quick turnaround times

Whereas high-street financial institutions will take as long as a week to approve a loan (should you not be suffering from bad credit), an instalment loan can be paid into your bank account within as quickly as 24 hours. Applications are usually done online and provided you include the relevant documents the institution is looking for, turnaround time is extremely quick.

The popularity of these types of unsecured loans will continue to rise in the United Kingdom no doubt. It is imperative, however, to find a lender with a very good track record and excellent customer service should you wish to take out an instalment, payday or logbook loan.

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