As inflation keeps growing, several categories of products are becoming more expensive. This can often make them more difficult to purchase, and some individuals may even find certain products or services prohibitively expensive. Items such as smartphones, laptops, desktop computers, refrigerators, and washing machines can sometimes have extremely high price tags, making it impossible for some to afford them.
However, banks and other lenders offer a type of loan that is designed to help individuals afford items that they would normally not be able to. Instalment loans enable borrowers to pay for virtually anything and pay the cost over time, through several monthly repayments. They are offered throughout the UK. The terms and conditions that are attached to them are improving with each passing year. This having been said, what exactly is an instalment loan, and how can one use it effectively to purchase prohibitively expensive products?
What Is An Instalment Loan?
Instalment loans are secured or unsecured loans, depending on their value and are treated like instalment credit. In other words, an individual borrows a large amount of money that he must then repay over the course of several months or years. Each month, one or more repayments must be made, depending on the terms and conditions that the borrower agrees to.
Unlike personal loans that must sometimes be repaid in the same manner, these have very specific uses. Borrowers must specify what the money will be used for, in the loan application. This having been said, the rest of the terms can vary from one lender to another. Some attach variable interest rates to the loans, while others offer fixed ones. Furthermore, while most banks do not have early repayment charges, this is not a rule and, again, depends on the lender.
What Can Instalment Loans Be Used For?
Most instalment loans are designed for specific purposes, such as the purchase of electronics or expensive household appliances. However, some lenders offer less restrictive versions that the borrowers can use; however, they see fit.
While many may not realise it, there are many instalment loans that individuals apply for on a regular basis. For example, mortgages or auto loans are instalment loans, as are personal ones. Generally speaking, the term “instalment loan” refers to how the loan must be repaid. It does not designate a specific loan that lenders offer.
Instalment loans can be used to finance the partial or complete purchase of virtually any type of product, service, or real estate. They are usually affordable, and the terms and conditions are easy to understand, making instalment loans a great tool for all those who want to buy products or real estate that they cannot afford to purchase otherwise.
Most lenders are offering increasingly better terms and conditions for instalment loans because this type of debt is becoming extremely popular. Approximately 65% of individuals who live and work in the UK have used instalment loans at one point or another, making this category of loans one of the most popular banking products offered to date.
The low requirements, flexible terms and affordable interest rates also make them great choices for those who have a low credit score or a financial history that is too short for other types of loans. Whether you need to finance the purchase of a home, a vehicle, or simply want to get an expensive gift for a family member, instalment loans allow you to do so without the expense of having a large impact on your financial life.