How to apply for instalment loans online?
Big-ticket expenses can eat into your savings and burn a colossal hole in your pocket, which is why tapping into your savings may not be the wisest idea. But some expenses need urgent attention, and waiting until you fulfil your savings goal may not be an option.
Instead of paying a lump sum upfront, you can consider borrowing an instalment loan to spread the cost of your expense over a fixed period. Planned and affordable monthly instalments help ease your financial burden.
Read on to find out how to apply for instalment loans online.
What are instalment loans?
An instalment loan is a short-term credit that you can repay over fixed monthly instalments over a set period. Instalment loans give you the convenience of affordable monthly payments. Since the instalments and the repayment cycle are fixed, you will know just what to pay and when to pay it. Personal loans, mortgages and auto loans are some examples of instalment loans.
Such an arrangement can make it easier for you to incorporate the loan repayments into your budget. This way, you will be able to ensure timely repayments. Missing repayments may result in a credit score drop, hampering your chances of securing credit in the future. Thus, it is in your best interest to adhere to your repayment schedule.
An instalment loan can solve a myriad of purposes. You can use it to finance a big-budget venture, settle an unforeseen medical bill, pay for home refurbishments, or car repairs, among many other uses. The idea of this loan is to ease your financial burden by spreading the cost across several monthly instalments.
Your credit score and income are two pivotal factors that majorly drive the lender’s decision. Having a solid credit history reflects a healthy relationship with credit, while a decent income will help the lender assess your affordability concerning the requested loan amount. Other important aspects of your application include your debt-to-income ratio, employment status, electoral registration, credit utilization ratio, etc. With a stellar application, you can even borrow up to £35,000.
Instalment loans for bad credit – should I apply?
Credit scores play a vital role in your loan application. But for whatever reason, not everybody can maintain a decent score. If you’re in urgent need of money, you may find instalment loan offers from lenders who are willing to lend you money. However, the interest rate on such offers will be sky high due to the risk involved for the lender.
If it is a loan that you planned for well in advance, you may be better off working on the factors that can improve your chances of qualifying for the loan. You can work on boosting your credit score by practising timely repayments for all your credit and utility bills. Besides this, you should get yourself registered on the electoral roll if you haven’t already.
How to apply for instalment loans online?
The process of applying for instalment loans is pretty straightforward.
Decide on a loan amount: This is a crucial first step that precedes even the application process. Evaluate your finances, assess your affordability, check how much money you’ll need and finally, decide on a suitable loan amount. Avoid borrowing an amount that you will not be able to repay.
- Check your credit score: Knowing your credit score will give you an idea about the kind of interest rates that you can expect when you apply. Besides, you can check for discrepancies in your report and raise a dispute to get them resolved before applying.
- File your application: Find an online lender and fill the application form. Most forms will require basic personal details such as your address, employment status, and income, followed by some loan-specific details (desired loan amount and term).
- Processing time: Once you file your application, you must wait for the lender’s decision. While most instalment loan lenders are quick to respond, some may take a while to assess your application.
- Disbursal: If the decision is in your favour, that is, if the lender approves your loan, the loan amount will be disbursed into your bank account via wire transfer (in most cases). You are free to use this money at your discretion, but you should use it responsibly and for the described purpose.
- Repayments: The repayment period usually begins a few days/weeks after the disbursal date. You should adhere to your repayment cycle and make timely repayments until the loan is paid off.
How do I choose the best instalment loan?
Here’s what you should keep in mind while choosing your ideal instalment loan:
- Eligibility: Before filing your application and undergoing a hard credit check, do a self-assessment to understand what to expect. This could help you save your time, effort and credit score.
- Shop around for offers: Exploring the market for offers will help you get the most suitable recommendation. Thus, instead of settling for the first offer, look around the market and compare different offers.
- Supple correct information: You are your lender’s only reliable source when it comes to personal details. Supply the latest accurate information to the lender. Incorrect information could be perceived as an attempt to mislead the lender, which may have other repercussions.
- Check the lender’s authorization: Choosing the right lender is critical to the borrowing process. There are lenders out there who operate without an FCA authorization. Thus, a background check on your lender is an essential step. You can check the registration status of your lender using the FCA’s official Financial Services Register.
- Space your applications well: You undergo a hard credit check with each loan application that you make. Hard credit checks can lower your credit score briefly. Therefore, you should leave health gaps between each of your applications.
Can I borrow long-term instalment loans?
Most instalment loan lenders offer a range of loan amounts to choose from, typically up to 36 months for unsecured instalment loans. If you choose a higher loan amount, you may be able to stretch your loan term over a longer duration. However, your financial scorecard should justify the loan amount you’re looking to borrow.
The loan agreement is the final stage of the application process. Until you reach this stage, you have time to reconsider your affordability. Ensure that you are borrowing a reasonable amount of money. What if your financial circumstances change? Will your savings be enough to pay off the loan? Having a contingency plan can help you sustain economic turmoil.
If you borrow more than what you can handle, it will only lead to financial distress. Failing to keep up with repayments can severely affect your credit score. Plus, there may be legal implications – the lender can get a County Court Judgment (CCJ) issued in your name. Thus, it is essential to consider the pros and cons to make an informed financial decision.