What is an installment loan?

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WHAT IS AN INSTALLMENT LOAN?
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An installment loan is a loan borrowed for an
agreed set amount that is repaid over several
months in installments until the full balance is
settled. Many customers will take out or consider
making a loan application at some stage in their
life, there are many benefits and a few negative
factors when looking into this but first people
need to be made aware of what an installment loan
technically is and what customers are originally
signing up for.
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An installment loan is a set amount borrowed by a
customer and is then repaid over an agreed set
period of time, each loan agreement will vary
between different repayment amounts and how long
customers have this loan for but some instalment
loans can be borrowed for up to several years and
sometimes for even a longer duration. 
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For example a mortgage is a type of installment
loan. When a consumer takes out this type of
finance loan their repayments that will be owed
will be for a set amount agreed between the
lender and borrower, for example if a customer
borrows 1,000 it is most likely a loan for that
amount would be repaid over a 12 month maximum
period but this could vary in some cases, the
repayments on this would most likely be up to
about 150.00 and I imagine that about nine
amounts would be due which would make the total
amount paid back at around 1,350.
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This is quite a high interest loan and most
lenders would charge much less interest than
this. Before choosing the instalment loan is it
always worth exploring the different options
available at that time so a customer can find a
loan with a good interest rate and one that
offers a repayment schedule that is over a fair
amount of months or years and more importantly it
can be affordable.
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When we consider where installment loans
typically exist from we tend to think of banks
offering consumers a long term lending solution.
Often such loans are associated with long
repayment periods, often years, and generally
speaking for large amounts of money. This in
itself is sensible and logical but what about the
short term lending market? 
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There are various companies that can offer short
term ways of lending but instead of one month
short term loans they will offer installment
loans, so customers can now then borrow up to
1,000 and repay at a time that suits them more
but normally no longer than 12 months would be
considered for this type of financial product.
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The market for borrowing a small amount of money
for a short period of time is now changing and
the options which exist within it are growing.
For many years if a consumer needed to borrow an
amount of cash, typically smaller than an amount
available from a bank or other so called high
street lender, the options available were limited
and very specific.
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Thats not to say there wasnt choice, there was
in terms of lenders available but the product on
offer was a short term loan that had to be repaid
over a single month. A consumer would be able to
choose from a range of lenders but all presented
the same option, borrow an amount until your next
pay date and pay the full amount back. 
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 If as a consumer you are considering changing
the repayment term then contact the lender and
advise what you want to repay but also if
possible make additional repayments or make early
repayments to get the account cleared and paid
off much quicker. The customers would not be
penalised for this and they may find with earlier
repayments the amounts due are less as some of
the charges and interest may be able to get
removed that could have previously been added.
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Thats not to say that this didnt suit some
consumers who just needed a quick money fix but
for a lot it has become clear over the years that
short term lending habits are more complex than
this. As time goes on it is becoming more
increasingly clear that consumers now view the
short term lending market as part of their
monthly income and budget requirement to ensure
repayment to a range of life expenses from bills
to cars and more can be made and not be missed.
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Thats why its so important that the market is
expanding and an increase in lenders offering
instalment loans instead of shorter term loans is
increasing with it. It is always vital that if an
instalment loan is taken out that the repayments
due are affordable and are met on time as failing
to make repayments on any loans can have severe
negative consequences.
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For more information
www.bfwggrants.org.uk
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Thank You