Are Instalment Loans the Best for Poor Credit?

If you have a poor credit rating then you will be limited in the borrowing that you can do. Many traditional lenders will avoid lending to anyone with a poor credit limit and this means that you will have to look at short-term loans if you want a loan where the lender is happy to allow those with a poor credit score to borrow from them. Within this category there is a selection of different loans available. The instalment loan could be considered to be one of the most useful and it is good to know a bit more about it so that you can decide whether it might be a good choice for you.

What is an instalment loan?

An instalment loan is a short-term loan which you repay in instalments. That sounds very obvious, but as short-term loans differ and some do not work like this it is an important feature. The loans tend to be available to most people even if they have a poor credit record. They can usually be arranged pretty quickly and are often for smaller and more manageable sums of money. This means that if you are in a rush for money they can be one of the better options for you. They will also be appealing to anyone with a poor credit record. As they can be arranged quickly, they can also be good for anyone who needs money really quickly.

How is it better than other options?

Other short-term loans include a payday loan. This is very similar but the loan has to be repaid in one lump sum. Although some people really like this as they can really quickly repay the money that they owe, it can be difficult for some to find the money to repay and the money they need to also cover their bills and other expenses afterwards. Therefore, having an instalment loans, where you can borrow a similar amount but repay it over a longer period can make repaying much easier. You may also be able to afford to borrow a bit more money as you will not have to worry about repaying it so quickly.  Another short-term loan is a guarantor loan and you also repay this in instalments. However, you tend to borrow more money and need a guarantor to cover repayments if you cannot meet them. Although some borrowers prefer this, it can be problematic for those that do not know anyone that they can ask to be a guarantor for them.

Are they best for poor credit?

Whether these are the best for poor credit is something that could be argued back and forth at length. However, the fact that you repay in instalments means that it is easier to afford those repayments. If you have a poor credit score, it could be because you often struggle with repaying things or you do not have a very high income. If either of these is true, then repaying in smaller amounts is likely to be an advantage for you. Although the loan will last longer and might be more expensive than loans where you repay more money over a shorter period, you are less likely to miss a repayment. If you do miss a repayment you will have to pay extra charges and this could lead to the loan being much more expensive which is not something anyone wants. There are other poor credit options though and it is good to look at them all to work out which will be the best for you.

How can it help me?

You will need to think whether an instalment loan might therefore be a good option for you. Every borrower is different with regards to how much they want to borrow, how much they are prepared to pay for their loan, how quickly they can repay and how much they can afford to repay as well as what their credit record is like. Therefore, whether this loan is suitable for you will depend on your situation. If you need money quickly have a poor credit record and want easy to manage and regular repayments then this could be a suitable loan for you. However, if you even if you have a good credit record it could still be a good loan for you if you need the money really quickly and want to repay it in small amounts. You will therefore need to think about the situation that you are in and examine all of your preferences with regards to loans as well as your options and make the best possible match that you can. It is worth finding out more about all of the different loans that are available to you and you will then be able to make sure that you choose the one that is best suited to you.