Instant loans are a means of borrowing a small sum of money repayable over a ‘short’ period. Unlike bank loans or credit cards which can offer periods of repayment which extend over several years, these loans are completely different. Instead instant loans offer a facility which is specifically designed to be repaid over several months and this is due to sums of money which are available for application. An instant loan can range in value from as little as £50.00 and in the case of some lenders, as much as £750.00. The amount which can be approved will be dependent on a few different factors, with the average amount borrowed being in the region of £300.00. Lenders of instant loans operate within the short term borrowing market and therefore can be defined as being short term & high cost borrowing choices. As this information suggests, these types of loans are not designed to be used for large scale or long term financial requirements.
Instant Loans and their Repayment Format
The purpose of instant loans will in some respects vary from customer to customer but their core function is that of assisting with short term financial concern. This could of course mean a number of different reasons but some typical examples include the following. An instant loan could be considered when an essential home appliance breaks and is need of repair, for example a washing machine. Similarly an instant loan could be used to cover the cost of a one-off car repair as another example. The point here is that these ‘type’ of costs are not likely to reoccur month after month and therefore could be managed via the use of a short term borrowing option.
In terms of how the instant loans product works, this will vary slightly from one lender to the next. That said all instant loans lenders are regulated by the Financial Conduct Authority and therefore are required to offer their products and service within very specific and customer focused guidelines. Those lenders who do not do so, are unable to trade within the market. Furthermore, to monitor such activity the Financial Conduct Authority assesses and individual authorises every lender. The term of repayment offered by any given lender will often be dependent on the amount being requested, although there will always be a good selection of terms. Normally lenders will often a selection of terms meaning perhaps repayments to be made over 3, 5 or 6 months for example or a short overall term such as 1, 2 or 3 monthly instalments. The key is flexibility and choice and this is best delivered via the offer of several different repayment terms as well as loan amounts. Instant loans lenders are keen to ensure affordability is key to each and every step of their application process and this will be evident in any application which is progressed.
Short term loans come in a range of different sizes and repayment terms. The modern day lender of such loans aims to deliver a resource which is not only flexible but also considerate of the realistic needs of the modern day consumer. Where things have changed in this market is fundamentally down to a new regulating body who is responsible for the overall operations of the lenders. This new regulating body is the Financial Conduct Authority (FCA) and since they were introduced a few years ago, the marketplace has been completely transformed. Not only do lenders now have to be FCA approved if they wish to offer lending options but the options they do offer need to meet the rules and regulations newly set out by the FCA. This means as consumers we can be confident that any of the lenders we consider, they will effectively have the FCA’s backing in terms of both product and service.
Terms of Short Term loans
In order to help ensure the product being offered is truly flexible, short term loans lenders offer choice when it comes to how their loans are repaid. This can be delivered thanks to the introduction of instalment based repayments. This means when applying for these sort of loans it is likely you will be presented with a selection of different repayment terms. This could mean for example, repayment split over 1, 2 or 3 months for example or could mean 3, 4 or 5 monthly instalments. Depending on the loan amount being requested it is not uncommon for short term loans lenders to offer repayment terms up to 6 months and in some cases beyond this amount of time. Quite sensibly the more that is being requested to be borrowed will result in the longer repayment terms being offered.
Take for example a £500.00 short term loans lender. Given that often short term loans are granted for average loan amounts of £300.00, a larger loan amount as with this example may mean longer repayment terms. Whereas for many of us repaying £500.00 as a single repayment, when interest is accounted for, is most likely a too costly option, making a number of pre-agreed monthly instalments at a lower rate is likely a sensible choice. Of course for those of us only looking for a £100.00 short term loans lender, it may be that we have the resources to repay this level of borrowing, with the interest payable, as a one of payment. So the term of repayment being offered by any short term loans lender will have the loan value directly in mind. As well considering the loan amount being offered, short term loans lenders will also take into account an applicant’s ability to afford the requested loan. This means viewing information available from Credit Reference Agencies as well as budgeting information supplied by the applicant at the point of applying. A collective understanding of all of this information is ultimately what allows lenders of short term loans to make an informed decision regarding any submitted application.
Thankfully nowadays payday loans come in lots of different shapes and sizes and this means as consumers, we have plenty of choice and flexibility at our disposal. Whether we are looking to borrow £100.00 until pay day or £500.00 for a longer period of time, there is likely to be an option to fit the need. Payday loans are not designed to be used all the time and instead are most effective when used as intended; for short periods of time. The name given to these type of loans is not coincidence and in fact the name ‘payday loans’ is very finding for the type of product on offer. Payday loans do what the name suggests and allows us to borrow until our pay date in simple terms. With this in mind it is easy to see how they vary from more traditional ways of borrowing money. Take for example a bank loan, available from a host of different high street banks, these can often be offered to consumers over a number of years’ worth of repayment and furthermore can reach values way up into the thousands of pounds. Clearly consumers needing to borrow these sort of sums would not benefit from the resources offered by payday loan lenders.
Best Repayment Term for Payday Loan
One of the most important considerations before taking a form of payday loan is whether the reason for borrowing matches the resource which is ability. As discussed above payday loans are not designed to be used as an on-going resource and therefore will not be useful to all consumer needs. Instead if you are looking to cover a short term financial short fall, payday loans can prove to be a useful resource. Take for example a broken washing machine or the requirement for a new car tyre. These are the type of costs which can arise from time to time but will not continue to be a financial concern month in and month out. If, however, there is a financial cost which is likely to occur regularly, it would be more suitable to consider the resources of a larger and longer term loan product; for example, a credit card provider.
So assuming there is suitable reason for borrowing, matching that of the resources offered by payday loan lenders, it is next important to select a repayment term which is sensible and realistic. This means not over-committing yourself financially in terms of the repayment amount agreed to. Given that payday loans can be repaid in a number of ways, there is plenty of different ways in which the repayment amount can be amended to fit your budget. Payday loans are often offered over a range of terms, whether this be 3, 5 or 6-month repayment terms or 1, 2 or 3-month repayment options for example. This means the repayment amount can be increased or decreased on a monthly period depending on the overall period of repayment which is decided upon. Therefore, it is very important to review the options and make an informed lending decision.
There can always be times when someone needs money and this can be down to so many different reasons. There can be some people who may need a large amount of money as they are looking to make some form of expensive purchase. This could possibly be for a new car perhaps or maybe someone is looking at putting money towards a new house etc. There can then be others who may only need a small amount of money to possibly just have some help paying an unexpected bill or they could just need some help making their finances last until they are next paid from their employer. Now regardless of whatever anyone ever wants the money for, if they have this saved away they can then look to use it as required to pay for whatever they need. Some people may then even have saved away to pay for their requirement outright. Now turning to savings is always nice when it is available however, this is not the case for everyone. If it is not available then a person may then have to look at borrowing the money.
When it comes to borrowing money when this is needed, some people may then not know exactly what options they have available at their disposal. For example if a loan is required then both short term loans and instalment loans could then be available. This is a way that a person can then look to borrow a selection of different loan amounts for that person to then repay the debt back over a range of different repayment terms. It can then be common that someone with instalment loans can borrow more and then they can repay that debt back over a longer duration. A mortgage for example is actually one of the most common instalment loans that people tend to borrow. So many people from all over the world of course have or have had a mortgage at some stage in their lives.
Borrowing Instalment Loans Quickly
I have found that borrowing instalment loans can have a number of different benefits for that person. It can give people flexibility on any amount borrowed. They can borrow a range of different loan values and can then repay the debt back over a suitable repayment term that suits both them and the lender. Another benefit of this borrowing is the fact that people can often get their cash quickly when it is needed and I always feel that this is going to be important. People can apply for instalment loans mainly online or sometimes it can be done over the phone. The application process can often be done in just a matter of quick minutes. Now if that same financial application is then accepted by the lender most of the time they will look to pay out that borrower that very same day. They will often pay out the loan into the borrowers bank account and these details will be provided at the application process.
If anyone is needing to borrow money and has then submitted some form of financial application, they then may be curious as to what happens during their application next. This may vary of course depending on the lender that is chosen but most of them will carry out very similar checks before they reach an overall lending decision. There can certainly be a high number of different factors that can contribute to the lending decision and these will be explained below in further detail. I will also explain the three main application stages for when people are applying for loans through direct lenders.
The first part of most applications through direct lenders would be the part where a potential borrower has to input their details regarding personal information. This is when someone will be asked to fill out information regarding such things as their full name, their home address, their date of birth as well as often their employment details. They can then also be required to complete a section that asks for both their bank and their card details. All of this information will be required before any lender can reach a decision on the finance. In certain cases people can then be requested for documentation in order to get something progressed further. This can be to validate something or confirm something as requested from that lender. For instance maybe a utility bill could be requested to provide someone’s address.
Finance Through Direct Lenders
Another common stage on every direct lenders application will be the credit check on the person applying. Any lender will have to calculate the chances of the borrower repaying the debt back once they have taken it out. They can normally have access to the person applying credit files and they can then use this information to see how they have fared with repaying other debts in their past. They will never be able to know exactly whether a person has the intentions to repay the debt but they can work out the likelihood of this being done. If someone does have bad credit and a low credit score as a result they can then possibly find it tough to get finance approved. Some direct lenders however, having said that might still be able to help them get finance.
The final stage on every financial application will of course be the final decision. This is when a borrower finds out whether or not they have been approved the finance. If they are accepted they can then often quickly liaise with the lender and see how long it will take them to obtain their short term loan or other finance type. If however, on the other hand if the person is declined then should they wish to, they can then move on elsewhere to try and get the finance approved by another lender. There can be a high number of different factors that can go into the final decision including things such as credit and affordability checks. Once the lender has reached their decision they do not have to justify it and they could just say unfortunately at the moment we as a company are unwilling to lend.
When it ever comes to anyone looking to borrow money, people may or may not know that there are usually a number of different borrowing options available for people to choose from, apply for and then potentially take out. That is just one of the many different reasons why no one should ever rush into apply for finance or just take out the first piece that may come along their way. From the financial market place these days’ people can often look to obtain both short term loans and instalment loans when a loan is the finance needed. This way people can then look to borrow a selection of different loan amounts for repayments then due back over a number of different repayment terms. Both of these are very common borrowing in a loan like format. Credit cards are also available from direct lenders. These of course allow people the chance to pay for a range of different items or also withdraw cash on credit via the actual use then of the card itself. All of these are provided by direct lenders and are a common way of borrowing money. They will each however have both benefits as well as negatives regarding what they offer people.
The short term loans borrowing market has certainly grown in recent years as a high number of different people it seems are turning to this way of borrowing money when they need finance. These loans as the name would suggest are out there to help people obtain a small amount of money for a short space of time. A pay day loan is the most common type of short term loan available in the market place. A short term loan when obtained will be due to be repaid within a twelve month period of time otherwise it will not then be a short term loan. A pay day loan certainly falls into this category because when these are obtained, they are repaid back to the lender as soon as that borrower is paid again from work.
Direct lenders as mentioned above can also provide instalment loans as the borrowing alternative rather than the short term loans available. This way they can potentially borrow more money when needed and then they can repay that debt over a longer period of time in possibly smaller instalments. A mortgage for example is a common type of instalment loan borrowing. These are a very common type of instalment loan and these are often repaid over many years. If a loan is due to be repaid back to a lender over longer than twelve months then the loan must be an instalment loan and not a short term loan. An instalment loan will be commonly used for long term financial purposes such as a new car or indeed a new house. A short term loan will not be used for long term purposes and should only be used encase of financial emergency such as paying an unexpected bill etc.