The non-bank loans sector has been at a very dynamic development stage for at least a few years. Available statistical data say that every year the non-bank loans industry is progressing at around 20 percent. However, which is very important, especially from the perspective of the clients of modern loan companies, the development of the non-banking sector is not only quantitative, but also and above all qualitative.
What does it mean? Loan companies not only record higher and higher incomes, more substantial profits and attract more and more clients every year. The number of entities operating within the loan sector is also increasing, and most importantly: the spectrum of available solutions that customers can use.
It is true that in the case of most loan institutions present on the market, the so-called payday loans, i.e. traditional quick loans for relatively small amounts of money and with a repayment period of 30,60 or 90 days, are still the basic element of the offer. However, in addition to this, modern loan institutions offer also other solutions, including, loan lines, secured loans and above all: long-term installment loans.
Let’s take a closer look at this last solution.
Payday loans in loan companies: what are they and how do they work?
As a rule, the installment loan mechanism in loan companies is similar to the consumer loan mechanism available in banks’ offers. This means that the loan repayment period is spread over many months and the repayment itself takes place in an installment system, and not through a one-off repayment of the entire liability.
What is the difference between installment payouts and standard short-term loans? Of course, the main differences are the maximum amounts available as well as the duration of the contract. In the case of installment loans, the loan amount can often be up to tens of thousands of dollars with a repayment period of several dozen months.
Other important information
It should be remembered that payouts in installments generally involve a much higher risk for the lender. This means that the process of verifying the creditworthiness of a potential customer may differ significantly compared to loans for the amount of one or two thousand dollars. It is therefore possible that the loan company will request from us e.g. an income certificate or will want to thoroughly verify our creditworthiness using other methods.
You should also be aware that repayment of installment loans is not always done on a monthly basis. Some companies, especially those from the UK, only offer installment loans with repayments on a weekly basis.
How do you calculate the cost of installment loans?
First of all, it should be remembered that when comparing the different payday installments available, one should not take into account only the amount of APRC, because this parameter can be deceptive. What should interest us is the actual cost of the loan in dollar and the amount of the monthly installment.
You should also pay attention to the possibility of suspending the repayment of the loan as well as the possibility of its extension or refinancing. This can be particularly important in a situation where, for various reasons, our financial situation will deteriorate at some point. In this situation, the flexible nature of the loan agreement we have signed will certainly prove to be a highly favorable circumstance for us.