Many people are apprehensive about taking out payday loans because of expert reviews that confirm such loans to be long-term expensive debt burdens. However, there is another, fast developing loan category that speaks of short-term small loans especially meant for the low-income individuals and these are instalment loans. These loans are considered the safest form of credit available to bad credit individuals. Consumer advocates are of the view that these are the best options for people who are considering payday loans or any other variety of loans available in the market. This is because such loans do not come with the final balloon payment that has the potential of pushing a borrower deeper into debt. The lending organisations forward their reports to the credit bureaus and thus on-time repayment of such loans can go a long way in helping the bad credit individuals in improving their credit standing. Loans taken in instalments are the safest products currently available in the market. They do not come with exorbitant rates and deceptive add-on products and charges.
How do these Loans Work?
Just like the payday loans, the instalment loans or the 12 month loans do not start off involving a huge amount of money. These loans allow borrowers to stagger their loan repayments into more affordable and smaller collections. Borrowers of these loans can either make the loan repayment in monthly instalments or spread the repayment of the loan over a time span of 6 months or 12 months. Borrowers also have the option of repaying smaller amounts every month. Therefore, it can rightly be said that such loans are easier to repay in comparison to the payday loans where the borrowers need to repay the entire amount of the loan in a lump sum along with the rate of interest on the loan. This puts a lot of financial pressure on the borrower. Loans available in the form of instalments are much more flexible giving borrowers the scope of spreading their repayments over time. Hence, there is no rush to repay the loan amount in full and the borrowers also have extra time for getting their finances back on the right track.
How do the Repayments of these Loans Work?
If you have been approved for an instalment loan then the next thing that you have to do is scheduling the repayment date for the loan each month. This will generally be the date when you have money on hand as this is the time when you have increased chances and the affordability of making the loan repayments. You will have to make all future loan repayments on the repayment date that you have agreed. The repayment will be taken directly from your bank account and therefore you do not have any worries about setting direct debit, calling the lending organisation or sending a cheque every time you need to make the loan repayment. It is also worth noting that the loan repayment amount that you owe will decrease during the term of the loan and if you find that you have the ability to repay the entire loan amount early then you have the flexibility of doing so. Taking the services of a broker can always help you in this direction.
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