How Weekly Loans Could Help You Manage Your Expenses

Unexpected expenses have a propensity to ambush you. It is obvious to feel unmoored by them in the absence of a rainy-day fund. Thankfully, a few direct lenders are out there to help tide you over during financial emergencies. There are various types of loans and each of them works differently. You could be added when making the perfect choice. Some loans are discharged in fell one swoop while others are settled in fixed instalments over an extended period of time, called instalment loans.

Instalment loans are considered more affordable than lump sum loans as payments are spread. For instance, if you take out a payday loan worth £500 to be paid off in full on the next payday along with interest, which amounts to £50, you will find your income short by this amount the second that you receive it in your account. As a result, insufficient funds will make it complex for you to meet other essential expenses and impel you to borrow money over and over again to meet them.

Fortunately, this harrowing experience does not have to be endured with instalment loans as payments will spread across months. However, when the borrowing amount is small, most lenders require you to discharge the debt in one go. It is unfeasible for them to spread payments across months when the loan amount does not exceed £500.

Some lenders are out there who provide weekly instalment plans. You will be obligated to pay down a fixed sum of money every week to reduce the burden on your pocket. They are certainly more manageable than those with lump-sum payment plans.

• Weekly loans could help you meet small emergencies

Weekly loans are aimed at meeting small emergency expenses. Whether you need money to have your car repaired or to meet the cost of medical treatment, these loans could prove to be beneficial. Applying for these loans is quite easy. As they are paid back in weekly instalments, you will not feel intense burden on your pocket.

Experts normally suggest that these loans should be taken out when the nature of the expense is urgent. If you can postpone it, save money instead of funding it with loans.

• Weekly loans can help improve your credit score

Weekly loans are generally affordable when the debt is to be settled in at least two months. There are some lenders who put you on a weekly instalment plan for a payday loan as well. Do not be duped by weekly instalments because the whole debt is to be settled with a month.

For example, if you take out a £500 payday loan required to be paid off with interest of £50, the size of the weekly instalment will be £137.5. However, some lenders will ask you to pay in two instalments because of a shorter repayment period. In that case, the weekly instalment will be £275.

These loans are seemingly affordable, but they are not. Though they are known as weekly instalment loans, you are paying the whole debt within the same month. Weekly loans can help improve your credit score when payments are spread across months. The repayment length of the debt must be at least three months.

When you show your commitment towards payments despite a change in your financial circumstances, it will help you do up your credit rating. You cannot see any significant improvement in your credit rating despite paying off the debt on time if the debt is to be settled in a lump sum on the due date.

However, it is crucial to ensure that your lender will inform credit reference agencies of timely payments. No lender is bound to inform credit bureaus about your timely payments. But if you make a default, they will immediately report it to the agencies.

Missed payments continue to stay on credit reports for up to six years, which means you will struggle to qualify for a loan at lower interest rates down the line. In case you miss the payment, make sure that you clear it as soon as possible. A lender generally takes 30 days to report it to credit bureaus. You can escape interest penalties by clearing the dues within 30 days, but you will end up with interest charges.

• Weekly loans come with flexible payment plans

Weekly loans, whether they are settled in a month or months, come with flexible payment plans. Lenders will carefully analyse your income sources and then decide how much amount of money you should be lent. It is crucial to check how much is coming in, but at the same time, they need to check how much is going out. Based on your expenses, it will be determined how much wiggle room your budget has to discharge the debt. The size of weekly instalments and the repayment term will be determined based on this fact.

For instance, if two borrowers borrow money from the same lender and earn the same amount of money, they will be offered a different repayment term. It depends on your financial circumstances. A lender would carefully examine your repaying capacity. It is likely that your budget does not have wiggle room to make larger payments, meaning the size of monthly instalments will reduce and the repayment term will be extended.

What is it you need to be cautious of?

Weekly loans are small loans, whether the whole debt is discharged within a month or a couple of months. They are generally aimed at meeting small emergency expenses. Subprime borrowers generally prefer weekly loans. Fearing losing credit score as a result of hard credit checks, most borrowers tend to apply for weekly loans with no credit check.

It is worth noting that it could be challenging to pay weekly loans with no credit checks. If you apply for a no-credit check loan, you will end up taking a toll on your financial condition. Most of the lenders charge very high interest rates as the default risk is too high. Since they are not secured, they do not have any right to repossess your assets to liquidate them to cover their money.

Exorbitant interest rates will make it harder for you to repay the debt on time. The size of weekly instalments will be quite high, and most probably the debt will be required to be settled within a month. It means the burden of debt payments is intense. Once you fall behind on payments, you will end up rolling over a loan. It will attract interest penalties and late payment fees. As a result, the amount of the debt will accumulate.

Over time, it will significantly increase. The amount of debt will be beyond manageable. Eventually, you will find yourself in an abyss of debt. Therefore, it is recommended that you choose a lender who lends you money after running an affordability check, and credit rating perusal is part of it. If not hard inquiries, they must make soft credit checks to determine your repaying capacity.

The final word

Weekly loans can help you manage emergency expenses. As payments are spread over several weeks, they are much more manageable than loans required to be discharged in fell one swoop.