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Representative APR


Representative Example: On an assumed loan amount of £750 over 12 months. Rate of interest 292% (fixed). Representative 171%APR. Total repayment amount £1351.20 and total interest is £601.20. 12 monthly payment of £112.60.*

* We do not know how many customers take out a loan or the APR, this calculation is based on the mean APR of the lenders we work with

What is an Instalment Loan?

An instalment loan is a type of loan that is repaid with regularly scheduled payments— typically in weekly or monthly instalments. Each repayment includes a proportion of the loan amount borrowed, plus interest. Nearly all instalment loans are ‘fixed-rate’, meaning the interest rate charged over the term of the loan is the same, making it easier for the borrower to budget in advance. Common examples of instalment loans include mortgage and car finance.

How Do Instalment Loans work?

Unlike payday loans which are short term loans intended to be repaid in full on your next payday, instalment loans allow you to spread repayments over a longer period of time - allowing you to manage your budget accordingly. If you are looking for a shorter loan, or don’t need to borrow as much, you could consider payday loans.

Getting an Instalment Loan With Bad Credit

An instalment loan could be a good option if you have a bad credit score, especially if you’ve found it difficult to borrow money from traditional lenders like banks. Instalment loans for bad credit would be a good choice if the amount you are borrowing would be too difficult to pay back in one lump sum.  

You don’t need a perfect credit score to apply for an installment loan. A direct instalment loan lender will assess your income and expenses to make sure that you can afford to pay back the loan. You'll be shown the total repayment amount before you sign the agreement.

What are the Advantages of Instalment Loans?

Borrow Exactly How Much You Need

Most banks and building societies don’t offer small loans. If you’re only looking to borrow £1000 or less, you could end up borrowing more than you need and consequently pay more in interest. Whereas instalment loans from direct lenders are flexible and can easily be tailored to your specific needs in terms of the loan amount and the length of time that best matches your budget and ability to repay the loan.

Faster Than Other Loans

Similarly to payday loans, instalment loans are intended to cover unforeseen expenses. In these circumstances, it’s likely that you’ll need money quickly. The application is simple to complete and if approved are typically paid out the same day. Some types of secured loans can take several days or even weeks to pay out a loan. 

Manageable Repayment Options 

Instalment loans are usually a better choice if the amount you are borrowing would be difficult to pay back in one lump sum. An example of a large instalment loan is a mortgage, which for most people would be impossible to pay all at once. With a flexible loan, you can choose to repay your instalment loan over a number of months. 

No Borrowing From Friends and Family

It can be embarrassing to discuss money with your friends and family, and they might not have the funds to lend you, even if they want to help. A great solution to this a loan with a guarantor: in this case an instalment loan.

Responsible Instalment Lenders

When looking at short term loans, you may look into bad credit instalment loans. A lot of people believe that they have poor credit, but this doesn’t necessarily prevent them from applying for a loan. You don’t need a perfect credit score to apply for an instalment loan, the loan just has to be affordable.

Legislation has also been put in place over the last few years to ensure that any UK-based direct payday instalment lenders are lending responsibly and a limit was placed on interest. Short term lenders can only ever charge fees totalling to £15 and no more than 0.8% in daily interest. You’ll also never have to pay back more than twice what you borrow. Before you take out a short term loan, or even sign the agreement, the lender additionally has to tell you when you’ll be making your repayments, how much they’ll be, and the total to repay.

Before you take out a loan, you do need to ask yourself if it is the best option. Long term financial difficulty should not be a reason for taking out short term credit - this can lead to a debt spiral of more and more borrowing. Credit should also never be used to pay back other credit, as it can lead to similar issues. Companies such as Step Change can offer free impartial advice, if you wish to discuss your debts or finances.

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