skip to Main Content

The Best Instalment Loans from UK Direct Lenders

Here you can compare the best rates on the market currently for instalment loans, and choose the lender that matches your criteria.

Pounds to PocketPounds to Pocket offer the best interest rates on the instalment loans we compared. An example of 150% interest per annum fixed on a loan of £700 for 11 months.

Peachy offered mid-range interest rates on instalment loans. An example of 259.33% interest per annum fixed on a loan of £400 for 6 months.

Quick QuidQuick Quid offer reasonable rates on instalment loans. An example of 292% interest per annum fixed on a loan of £300 for 2.5 months.

What is an instalment loan?

An instalment loan is a loan that’s paid off over a period of time instead of a lump sum. You pay it back in instalments.

Why choose an instalment loan?

They are typically short term loans, and are therefore usually chosen when circumstances require for some fast cash. They are usually considered as an alternative to a payday loan, and are also known in American English as installment loans.

They can be beneficial for those looking to manage themselves out of debt, when they know that a regular schedule is the best way for them to repay a loan.

High street banks do also offer instalment loans, however these are typically much more long term, ranging from 5 to 20 years or more in duration.

How much can you borrow in an instalment loan?

The amount you can borrow in the UK for an instalment loan ranges usually from £50 to £2,500, and is dependent on your credit history and your current monthly income.

Will an instalment loan help to build your credit?

Yes definitely, like any other financial repayment option if you continue to make your instalment payments then it counts towards your credit scores “payment history”.

It can also help to consolidate previous debt, by switching to a lower interest instalment loan you may be able to pay your debt off earlier and therefore improve your credit scores “current debt” section.

What is an rrsp instalment loan?

An RRSP is specific to Canada, allowing Canadians to save for their retirement. An rrsp instalment loan allows you to contribute a fixed amount into your RRSP, which like any retirement plan is invested in stocks in the hope of making a return. The idea is that the return from this investment will outweigh the interest paid on the rrsp instalment loan.

How to calculate an instalment loan?

The beauty of instalment loans are that they have fixed interest rates over the period of the loan, making calculations very simple.

Basic Formula

So the information you need to calculate the costs are:

  1. The APR % of your loan.
  2. The total amount of your loan.
  3. The duration of your loan.
  4. The number of payments per month.

From here you can work out the amortization by following this useful guide.

Excel Formula

To calculate loan repayments in Microsoft Excel, you need to use the PMT function, which uses values such as:

  • Rate – The interest rate

  • Nper – The number of payments

  • Pv – The present value, or the total amount that a series of future payments is worth now; also known as the principal.

You can find out more about this function here: https://support.office.com/en-gb/article/pmt-function-0214da64-9a63-4996-bc20-214433fa6441

Housing instalment loan calculator

If you’re looking to calculate your mortgage or housing instalment loan payments then you can use the following calculator: https://www.hsbc.co.uk/1/2/mortgages/repayment-calculator

Compare Instalment Loans Against Other Lending Options

Here we can compare your financial options to see if an alternative to instalment loans is more appropriate for your circumstances.

Instalment loan vs credit card

If you qualify for a 0% credit card then it’s a much better option for getting credit.

However if your credit card is going to charge you high interest fees and potentially other fees, then you need to calculate whether this total interest paid is more or less than the total paid via your instalment loan.

Instalment loan vs overdrafts / line credit

This depends on what you will be using your credit for. If you are using the lump sum all at once to pay off a bill or other big payment, then more often than not an instalment loan will be a better option for you.

However if you’re just looking to have extra cash available “just in case” then an overdraft or line credit is much better as you will only pay the interest on what you’re using at that time, not the total amount of credit that you have available.

Revolving credit vs Instalment loan

Revolving credit doesn’t have a fixed number of payments, whereas an instalment loan does. Therefore revolving credit is a continuous line of credit, in contrast to instalment loans which are for a fixed period of time, and need to be reapplied for at the end of each period to maintain them.

Instalment loan vs mortgage

Mortgages are usually types of instalment loans, and as such the versus comparison isn’t really necessary.

Instalment loan vs payday loan

The different between an instalment loan and a payday loan is that instalment loans are paid off equally over time, whereas payday loans pay the majority of the money off at the end of the loan period.

Managing Finances With Instalment Loans

In some situations it can be very helpful to use an instalment loan to get the rest of your credit in order.

Instalment loan to consolidate payday loans

Payday loans can quickly get out of control, with spiralling interest rates creating a debt cycle that’s difficult to escape from.

You can use an instalment loan in this situation to try and gain a better interest rate, and use the lump sum of the loan to pay off existing payday loan debt which allows you to get out of debt more quickly.

Instalment loan payoff letter

If your debt has spiraled out of control and you need help, then you can propose to a lender to pay off your debt in instalments and avoid paying the extra interest.

This helps with loans that are growing exponentially such as payday loans.

You can create your own letter on this website.

Instalment loan payment schedule

Instalment loans usually follow a process called Amoritization (sounds scary, but really isn’t), which simply means you’re paying off the balance of your loan equally over time.

This means your schedule will be very simple, you calculate the total loan amount, plus the total interest amount, and divide by the duration of your loan in months to find your monthly payments.

Back To Top