Instalment Loans vs. Payday Loans

There are some key differences between an instalment loan and a payday loan that you should know about before making a decision. Both of these types of loans have a lot to offer, but you can probably benefit from one more than the other. This article will help you to understand which option will best match your particular needs. You don’t want to make a final decision until you consider these things.

Borrowing Amounts

With payday loans, you can typically borrow anywhere from £100 to £2,000. Instalment loans usually have a minimum of £500 and a maximum borrowing amount of £5,000. If you need to borrow a large sum of money, an instalment loan is probably your best option. Just keep in mind that some lenders give out more than others, so you need to check with each one.

Credit History

Both instalment loans and bad credit payday loans allow bad credit applicants to get approved. The private lenders that give out these loans are usually pretty flexible when it comes to matters of credit. A low score is by no means a guarantee that you won’t get either of these loans.

Keep in mind that some lenders are bigger sticklers for good credit than others. If you think your credit might be a problem, you should consider getting a co-signer. This could really improve your chances of getting the loan.

Repayment

There is a pretty major difference between instalment and payday loans when it comes to repayment. A payday loan is paid back all at once, usually after 2-4 weeks. With an instalment loan, you’ll need to make regular monthly payments until the entire loan amount is taken care of.

Lenders allow borrowers to pay back their instalment loans over a longer period of time, as they are usually for bigger amounts. You will have a certain number of months to pay your loan back. With payday loans, there is going to be a set date that the entire amount of loan is due.

You can usually opt for automatic repayment with both types of loans. This means that the amount you owe is automatically taken from your account. It is often a requirement if you want to borrow from most lenders.

 Overall Cost

You’ll find that there are numerous factors that can affect how much you pay for your loan. The interest rate on your loan will definitely affect how much you end up spending all in all.

Interest rates on instalment loans tend to offer lower interest rates, but the rate you get partially depends on the state of your credit. Payday loans can also offer fairly low rates, but you might have to do a bit more research.

These loans can both come with origination fees, which usually make up three percent of the total loan amount. It is sometimes possible to get this fee waived, which can save you some money.

Whether you are going to get an instalment loan or a payday loan, it is important to make sure that you can afford it. This means taking an unflinching look at your finances to see if this is a real possibility for you at the moment.

Who Gives out These Loans?

Payday loans are offered exclusively by private lenders, most of which are based only online. You can get an instalment loan from a credit union, bank or private lenders. It is highly recommended that you consider choosing the latter option regardless of which type of loan you’re interested in.

The fact is that private online lenders have a lot more to offer than most banks or credit unions for that matter. These lenders tend to be a whole lot more flexible with laxer requirements for approval. They don’t focus on an applicant’s credit score and history as much as these financial institutions. This means that you will have a better shot at being approved.

Requirements

Anyone who wants to get a loan in the UK needs to be a legal citizen with a valid current account, email address, and phone number. These are the most basic requirements for these loans and all others.

You’ll also need to satisfy the minimum income requirements, which vary depending on the lender. The more money you want to borrow, the more income you’ll have to bring in with each paycheque. A stable job history is also ideal but not necessarily required.

With all of the differences between instalment and payday loans, you will need to make a point of reviewing them before making a choice. An instalment loan is generally a better option if you need to borrow more than £2,000. A payday loan can be highly useful if you need a smaller amount right away. Both types of loans are relatively easy to get approval for, even for people with spotty credit records.

Which Factors do Lenders Consider for Guarantor Loans?

There are a specific set of factors that lenders take into consideration before approving someone for a guarantor loan. If you are planning on applying for this type of loan, you should be aware of these things. While these loans are fairly easy to get, you will still need to be prepared. When you take the time to learn about what it takes to get approved, you will instantly increase your chances.

How Easy is to get a Guarantor Loan?

These days it is actually pretty easy to get a guarantor loan, but not everyone is approved. You need to remember that approval is never guaranteed. Any legitimate lender will not make this promise to anyone before they even submit an application.

The more qualified your guarantor is, the better your chances will be of getting the loan you need. This is why it is so important that you learn about the criteria for qualifying. When you understand what it takes to be approved, you will have a much easier time getting what you need.

Your Personal Debt

The amount of outstanding debt you have is just one thing that a lender will consider when deciding to approve or reject your loan application. The less debt you are carrying, the better your chances will be of getting the money. It is important that you find this out before submitting your application.

The lender will also consider your debt-to-income ratio, which is how much debt you are carrying versus how much money you make. A high debt-to-income ratio won’t instantly prevent you from getting a loan, especially if you find a qualified guarantor. This is still something that you want to keep in mind though.

Job History

A solid job history is also something that a lender will look for, both in the primary borrower and the guarantor. If you have had the same job for a while, your chances of being approved are fairly good. Those who have had lots of jobs over a short span of time are less likely to get this type of loan. The guarantor also needs to have a stable history of employment.

Credit Score

While your credit score might not be a big deal when applying for a guarantor loan, the co-signer’s rating is. The person you choose to be your guarantor should have a solid score and credit history. This is one of the more important things that they will look for. You should have this person check their own credit before you have them apply.

Business Revenue

If you are going to apply for a guarantor loan as an entrepreneur, you will definitely need to provide the lender with proof of your business’s revenue. They will need to know how much you make before deciding whether or not to approve your application.

Income from Job

Even those who have a guarantor to sign onto their loan will still need to provide the lender with proof of their income. This is how much money you make from your job each month. It is going to be one of the deciding factors when it comes to whether or not you’ll be approved. If you make enough money to pay back your loan on time, there’s a good chance you will get it. Keep in mind that the lender will look for proof of income.

Payment History

Your payment history will have an impact on your ability to get approved for a loan as well. If your credit history shows that you have missed lots of payments, it could work against you. Each missed payment counts against your credit. This is why it is so important that you make a point of paying all your bills on time. The lender is also going to take a close look at your guarantor’s recent payment history.

History of Housing

One thing that a lot of people don’t know when applying for a loan is that their housing history does matter. Lenders are always looking for how stable an applicant is, and this is just one indication. If you have lived at the same address for a while, your chances of getting approved could be a bit better.

When you are filling out your guarantor loan application, you need to make a point of being completely honest. Even one small lie can completely sink your chances of getting the loan. You also want to go over the application a second time to confirm that everything is properly filled out and accurate. This will ultimately increase your chances of getting approval from the lender. A guarantor loan can be an excellent way to get the money you need despite having a low credit rating, but you need to satisfy other requirements.