How do instalment loans work?

Instalment loans work by allowing borrowers to repay their loans over a longer period of time, which can make things more manageable. Staggering the overall cost of the loan over a longer time, means there could be a smaller impact on your monthly or weekly take-home pay, after repaying your monthly debt on the instalment loan.

With instalment loans, you apply for the money you need and agree the amount of time over which you would like to repay the loan. Then, once the loan is approved and the money is transferred by us, you start repaying the loan plus interest on agreed credit repayment dates. The agreed repayment date will usually be around the time you receive your salary from your place of employment, keeping things simple.

By making monthly repayments, you pay off a portion of the loan plus interest. Because the interest on an instalment loan is charged daily, your repayments get smaller and progressively more manageable. This also means that repaying your loan early is potentially achievable too.

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Representative Example: Borrow £400 for 4 months: 3 monthly repayments of £156.09 followed by a final repayment of £156.07. Total repayment £624.34. Interest rate p.a. (fixed) 288.35%. Representative APR 1,267.9%. 

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Warning: Late repayments can cause you serious money problems. For help, go to www.moneyhelper.org.uk.