An introduction to instalment loans
What are Instalment Loans?
Instalment loans are personal loans that you repay in regular, monthly instalments. What that means is that you can apply to borrow a lump sum of money and agree on a loan term and repayment plan with a lender. You will agree to a fixed number of monthly repayments, usually of a fixed value, over a period of time.
For example, let’s say you borrow £2,400 and will be paying £200 each month (in addition to interest rates and any fees) for 12 months. You will continue to pay these instalments regularly upon the repayment dates agreed upon until you have repaid the entire amount you’ve borrowed, in addition to any interest your loan has accrued.
Am I Eligible to Apply for a Personal Loan?
One of the main advantages of instalment loans is that they are an accessible form of credit, available to those applicants in all different kinds of financial situations.
As we are a credit broker and not a direct lender, we work with a panel of lenders each of who have different lending criteria you must meet in order for you to be accepted for credit. These requirements are, but are not limited to:
- At least 18 years old
- UK resident for at least 3 years
- In possession of a valid UK bank account
- With an income of over £800 per month
How Do Instalment Loans Work?
Getting Started
If you’re interested in understanding how the loan application process works, we’ll show you exactly how. In the following section, we’ll provide all the information you need to find out how you could secure yourself a great deal on a personal loan with Flexy Finance.
How Can I Apply for an Instalment Loan?
One of the main advantages of this type of finance is that they’re readily available and accessible to a range of different customers.
At Flexy Finance, we offer instalment loans amongst a variety of different personal loan products to suit our customer’s needs and requirements.
We’ve developed a general guide which will help you better understand the process of applying for a loan. We cover from the point of application all the way to the repayment of the loan.
Step 1 – Making an application for instalment loans
The first step is to fill out the application form. This application form is simple to fill out and is an entirely online process. The form itself requires you to provide some basic details which are used for us to assess your application and determine if you are eligible for traffic or not.
The information that we need you to provide includes:
- Loan amount and repayment: Tailor the loan to something that suits you.
- Personal info: We require basic personal information such as your name and date of birth as well as your contact details so that we can remain in contact with you.
- Housing information: Your home address and for how long you have lived in the residence for.
- Employment: We want to know what your job is, the length of time you have been working in your current employment and what industry do you work in.
- Income details: By understanding your income we can better assess your application.
- Monthly outgoings: We look at monthly expenses to ensure that the lenders can lend responsibly and that loan repayments will not leave you out of pocket.
- Banking details: Your bank account details are required so that the lender you are matched with can transfer the loan into your account.
Step 2 – Submitting your application and receiving an offer
Once you submit your application after completing the entire form, your application will then be assessed. Once it is assessed, as a credit broker, we will look to match you with a loan provider that is able to offer you a loan. When we find a provider they will review your application as necessary and offer you a loan.
Remember, do not rush into accepting the loan straight away. Take the time to read the terms and conditions of the loan being offered to you and ask any questions if you’re unsure about specific elements of the agreement.
If you choose to accept the offer, you will be bound by the terms and conditions of the contract and will not be able to opt out.
Step 3 – Receiving the loan
Once you have accepted the loan and everything has been agreed between you and the lender, the money will be transferred into the bank account that you provided. The time it takes for the money to be transferred varies between lenders.
Step 4 – Making monthly repayments
After the money has been sent to your account, it is your obligation per the terms and conditions to repay the loan back, including the interest rate, in monthly instalments. This is pre-agreed with the lender and you will stop paying monthly instalments until the loan and interest has been fully paid off.
Receive an instant decision on your loan
After you have submitted your application, we will then evaluate your application and your credit by using a soft credit check in order to be able to match you instantly with one of our top UK lenders who will be able to accommodate your needs, within just a matter of seconds.
Keep on top of your monthly payments
After being matched with a lender you’ll then receive your offer for credit from a lender. Once you have read the terms and conditions of the loan and signed your loan agreement, a lender will be able to deposit the loan straight into your bank account.
Typically you will start repaying your loan back immediately in regular monthly payments, so the best course of action for you to take is to stick to your monthly budget and ensure that you keep on top of your repayments.
If you do have any doubts about your current financial circumstances and your ability to take out credit, you can answer a few questions about your situation and the Money Advice Service can provide you with a Money Health Check on your circumstances.
Representative Example
| Representative Example | |
|---|---|
| Annual Interest Rate | 150% pa (Fixed) |
| Total Amount of Credit | £850 |
| Loan Duration | 11 Months |
| Total Amount Repayable | £1,609,25 |
| Total Charge of Credit | £759.25 |
| Monthly Repayment Amount | £146.30 |
Ensure that you check your credit history before you apply for any type of finance. This will allow you to determine if you are likely to be accepted or not. Checking for missing information or inconsistencies on your report, such as unrecognised applications or missing payments will have a negative impact on your credit. Therefore it is crucial to check and contest any incorrect information.
How do they work?
Instalment loans work the same way most personal loans do. This form of credit is repaid in scheduled and pre-agreed monthly repayments for your loan duration until both the total amount payable and the interest has been repaid.
How Long Do You Have To Repay?
Like the loan amounts, the repayment periods will differ. A small unsecured loan of £500 may be repaid in two months, for example, while higher amounts (think several thousand) will, understandably, be repaid over a more extended period, of 1 to 60 months. Like the amount you can apply to borrow, your credit score can affect the length of your loan.
A poor credit rating can limit your repayment period, which will result in higher instalments to pay, and almost certainly, a higher interest rate. Secured loans typically come with longer repayment terms because of the high amount, but also because the borrower provides collateral for securing the loan.
Always know what you can afford to borrow. You can do this by budgeting and looking at your monthly outgoings. Alternatively, you can also check your affordability by using a loan calculator, which will determine the total loan amount and the payments you can afford.
How much can I borrow?
At Flexy Finance, we offer personal loans of £100 to £5,000 for flexible repayment terms of 1 to 60 months. Longer terms are subject to status and the amount you require to borrow.
Don’t forget to check with the Financial Conduct Authority (FCA) to see if the lending company is authorised and legally allowed to operate. A lender should have the FCA’s logo on their website if they are authorised, or you can double check the FCA Register.
Can my loan be repaid early?
Yes, these loans can be repaid early, however, when choosing a lender to take out credit with, if you are considering paying your loan back early, ensure that you choose a provider who gives you that option without charging you an Early Repayment Charge (ERC).
ERC and other additional charges will be disclosed in the terms and conditions of your loan agreement before you have to sign, so ensure that you read the terms and conditions first.
Check the FCA Register to see if a company is authorised and regulated by the Financial Conduct Authority and are legally allowed to operate.
Should I borrow money if I’m already in longstanding debt?
It is not advisable that you borrow money to cover long standing debts. Borrowing money to cover long standing debts or borrowing more than you can afford, can lead to financial difficulties.
If you are having problems with debt you can contact the following organisations who are able to provide free advice to people struggling with debt:
Can I Get a Loan with Bad Credit?
Instalment Loans and Bad Credit
Personal loans are accessible to applicants from all different walks of life, regardless of financial situation or social status. While it is easier for those with perfect credit to get approved than others, all the lenders we work with consider all applicants impartially.
Limitations will come up in a few cases, subject to things such as unaffordability, unreliable income or an uncertain employment situation.
Can I still get a Loan with Bad Credit?
One of the benefits of these loans is that they are accessible to customers on both sides of the credit score spectrum. If you have been struggling to borrow money in the past due to poor credit, you know how frustrating it can be to face limitations on borrowing and in some cases even rejection.
Whilst you cannot get instalment loans without a credit check, there are still available options for bad credit in the UK. Since we work with a panel of the top UK lenders, you have a higher chance of being accepted by for a loan, even if you have faced financial difficulties in the past.
Be aware that representative APR’s are a representative example of the rates that you can expect to pay on your loan. While 51% of applicants will receive that rate, be aware that the rate you are offered may differ.
How does bad credit affect my likelihood of getting a loan?
It’s no secret that having bad credit can affect your chances of being approved for credit, however, it can also affect the terms of your loan if you do get accepted.
- Shorter loan amounts – a lender may reduce the amount they are willing to lend you.
- Shorter repayment periods – a lender may shorten your repayment period, giving you less time to default on it.
- Higher interest rates – high interest may be added to the loan to account for the risk of lending you the money.
How can I improve my credit?
Bad credit isn’t the end of the world, but you don’t want to have it forever as it can affect your opportunities in the future. Here are just a few ways you can improve your credit.
- Pay off any outstanding debt – utilities, phone contracts, payday loans, repay them all.
- Reduce the number of credit cards – if you’re not using them, limit yourself to the ones you do and close the other accounts.
- Ensure you make repayments on time – repay your debts in full and on time as not to incur any late fees or missing charges.
Will a loan affect my credit?
An aspect that often confuses people is the relationship between loans and improving your credit.
Should you keep up to date with your repayments, clearing the balance of the loan, you’ll boost your credit score.
However, should you fail to keep up with the repayments and default on the loan, then this will have a negative impact on your credit.
Understanding the Advantages and Disadvantages
Benefits And Drawbacks
Could this credit option be the best solution for your needs? If you’re looking into taking out an instalment loan, then you need to be aware of both the negative as well as the positive to avoid any nasty surprises in the future. Take a look at both the pros and cons of these loans and see whether they’re worth you committing to.
What are the advantages?
- Repay in instalments – spread the costs of your loan over 1 to 60 months.
- Accessible to all different kinds of customers – unsecured personal loans for both good and bad credit.
- Quick and easy to borrow – quick decisions on your application, in comparison to a bank loan or with high street lenders.
What are the disadvantages?
- Fixed Interest rates – the interest on these loans do not react to the base rate.
- Money problems and charges if you do not keep up with the repayments.
What Are The Alternatives?
Your Options for Credit
If you are unsure whether instalment loans are the right option for you or you are worried about your affordability, then you may be wondering what your alternative options are for when you need cash. Here are just a few alternative options for credit.
What are my alternatives?
Secured loans
For larger sums of cash or if you have bad credit, then you may want to consider securing your loan. This will require you to possess an asset such as a property or vehicle to secure the loan against. However, should you miss repayments you run the risk of having your asset repossessed.
Credit unions
Alternatively, you can approach your local credit union in order to take out a loan. However, you will have to have impeccable credit to be approved and your application may take longer to be processed.
Friends and family
Borrowing from friends and family means that you won’t be required to pay any interest, however, it is not without its complications. If you do know someone who is in a financial position to lend you the amount you require, you must ensure that you repay the money quickly and in full as not to sour any relationships.
FAQs
After wrapping things up, you should be able to make an informed decision as to whether or not this type of credit would be a good option for your current and future financial situations. However, if you’re still unsure and have a few unanswered questions, take a look at our frequently asked questions and see if we can answer any of your pending queries.
What is Representative APR?
In layman’s terms, the representative APR (Annual Percentage Rate) is an example of what borrowers can expect to pay in fees and interest over an annual period expressed as a percentage of the loan.
In order for a lender to display a rate of Representative APR on their website, at least 51% of their customers must receive that rate, however, it is not a guarantee that applicants will also receive that rate in their loan agreement.
How much will I be able to borrow?
We here at Flexy Finance offer personal loans from £100 to £5,000 and will use the information provided on your application to ensure that the lender you are matched with is lending responsibly.
The amount that a lender will offer an applicant can vary and is based on a few different factors, such as their term of employment and any current outstanding credit commitments.
How long will it take to repay the loan?
Our flexible loan terms here at Flexy Finance are between 1 to 60 months, subject to status.
What information will I need when I apply?
In order to apply for a loan with Flexy Finance, you will need to have the following information to hand.
- Details of your income, along with any amounts you must pay in relation to renting or a mortgage
- A home telephone number
- Details of your residence over the last three years
- The name and address of your employer
Can I get small installment loans for bad credit?
Yes. Whilst it may be difficult to receive instalment loans for bad credit, there are loan providers that specialise in providing bad credit loans in the UK.
If you are struggling with poor credit, then applying through a broker, such as ourselves, is probably a better option for you. This is because we search a large panel of the top UK lenders in the industry, and therefore, there is a higher chance of you being accepted.
