Generally, there are two types of loan – secured and unsecured. A secured loan needs a borrower to pledge an asset as collateral for the loan. Whereas for an unsecured loan, you do not need to pledge any asset. An unsecured loan is also known as a personal loan. An instalment loan is a type of personal loan where the borrower repays it with a set number of scheduled payments. Mostly, people choose an instalment loan because it allows a borrower to repay in monthly instalments. Borrowing an instalment loan helps you in maintaining your monthly budget without fail. You can use the loan depending on your financial necessities. Lenders generally offer borrowers to choose an amount ranging from£1,000 to £35,000 for one to seven years. There is another type of loan that lenders offer – short-term loans. With a short-term loan, you may borrow from £100 to £1,000 for 12 months. Most popular types of short-term instalment loans are listed below:
Debt Consolidation Loan
A debt consolidation loan allows you to combine all your current debts into one. That means you only have to make a single repayment each month. Sometimes, it becomes difficult to manage multiple debts for which we start falling behind on the repayments. Our credit score gets damaged if we fail to make the repayments on time and in full. This loan can help you sort your debts in a trouble-free manner.
A payday loan is also known as high-cost short-term credit. Individuals who need funds for a brief period and need a financial breathing space for repayment – may choose this loan. You can borrow a Payday Loan on Instalment and fulfil your monetary obligations. Make sure that you will be able to repay the loan on time to avoid any inconvenience such as – damage to credit score, and levy of additional fees by the lender.
A student loan is designed to help students to finance their education. They can pay for the books, tuition fees and other associated costs with the funds they receive when they apply for it. The rate of interest for these loans may be higher as they are unsecured. Borrow wisely to avoid any debt trap. Student loans can prove to be beneficial if you use it responsibly.
Individuals who work for themselves to earn money can borrow self-employed loans in times of need. They need to have a steady and regular source of income that will help the lenders to make their decision. The lenders will assess your affordability and creditworthiness before approving your loan application. Most of the self-employed individuals opt for this loan due to the flexibility it offers.
Sometimes, we do not need a large amount of money. All you need is to borrow a small loan to help you deal with a financial emergency during a mid-month. It is wise to borrow an amount that you can afford to repay. Never bite off more than you can chew. Prepare a repayment plan beforehand to streamline your repayments.