The Benefits And Drawbacks Of A Home Credit Loan
Are you considering a home credit loan? As you know, you need to look at the problem from all sides before making a decision. It would be helpful to do some research and learn What Is A Home Credit Loan in order to make sure you have all the relevant information. You also have to keep in mind that all loan options have benefits, as well as drawbacks, so it’s worth reviewing them before you make your final decision.
The Benefits Of Home Credit Loan
The application process is quick and easy and can be completed online. All you need to do is fill out a form and then wait for the home credit loan agent to call you and set up a visit. Alternatively, you can also call and leave your details with an agent at the company. It doesn’t take longer than a few minutes.
After that, you receive a quick visit from the agent who will handle your loan so you can discuss offers. It's up to you how long it takes until you finalise the process, as it depends on how quickly you decide on a suitable option. Usually, you should be able to receive the money on the same day.
One of the main reasons why people choose to take out home credit loans is because it is very convenient. Why? Because you don’t even have to leave your home. The home credit loan agent comes around for each step of the transaction, from applying to bringing you the money to coming back to collect the repayment instalments.
If you are an extremely busy person, or you have limited mobility and can’t leave the house to pursue a regular loan, this alternative might be ideal for your situation.
It does not require good financial standing
Another benefit is the fact that it does not have strict requirements regarding your financial status. Therefore, if you're unemployed, or Equifax deems you to have bad credit, you can still get a loan. Home credit loans for people with bad credit or home credit loans for unemployed individuals ensure that anyone can receive a loan that can help them with their financial dilemma.
It can be repaid in instalments over a longer period
Some people opt for payday loans, but the main drawback of that is that you need to pay the entire amount at once when you get your next pay check. That's helpful if you need money urgently and for a very short amount of time, but it's not ideal if you can't afford to make the full repayment.
Home credit loans can be repaid in instalments, over several months, making it significantly more affordable. That enables people who don’t have regular access to large sums of money to borrow and repay loans at a rate and pace more suited to their particular needs.
The Drawbacks Of A Home Credit Loan
The loan amounts aren’t massive
Because home credit loans are unsecured loans (meaning they do not require collateral), the amount you are allowed to borrow is not very large. That means that you must limit yourself to £1000, at most, but usually, companies offer loans under £500. It depends on your particular situation.
If that is all you need, then this loan option is great, but if you were looking to cover a major purchase, then this limit can be a considerable drawback. You can get higher amounts with secured loans or small guarantor loans.
The interest is high
The unsecured quality of this loan also means that the interest rate is quite high. Because you’re not a secured borrower and you’ve got nothing to offer, should you become unable to repay the loan, the lender must attenuate the risk by increasing the amount you repay.
That means that the smaller the repayment instalments, the longer the period of repayment and the higher the amount of interest. Especially compared to other more traditional types of loans, the difference is staggering.
For example, let’s say you borrow £200 from a traditional lender and from a home credit loan company. While the traditional lender might charge an APR of 38%, the home credit lender will charge an APR of 272%. Over the course of a year, the traditional loan will end up costing you £237, while the other one will set you back £364. That’s a difference in interest of £127, or 4 to 6 monthly instalments.
You might struggle to pay every instalment
If the interest is high and you do not benefit from a regular income, being able to afford the fixed repayment instalments can become an issue. Some lending companies will offer flexible repayment, so that might enable you to pay smaller amounts fortnightly or weekly, if that makes things easier.
However, the more frequent payments may have the opposite effect and become more stressful altogether. Before deciding to take on a loan, you must determine whether or not you can afford to pay it back.
You may run the risk of falling prey to loan sharks
Unfortunately, because these are not regular loans from traditional financial institutions, not all of these companies are authorised to grant loans. Loan sharks operate in the same way as normal lending companies, and you only realise they're not a trustworthy company when they start pressuring you or threatening you when it comes time to repay. Make sure you thoroughly research the company before signing anything.
In conclusion, a home credit loan can be a suitable solution for someone who is struggling with financial problems. However, it’s important to take into consideration benefits, as well as drawbacks before deciding on a loan option. If the drawbacks are too much for you, perhaps you should research home credit loans vs unsecured loans and see if an unsecured loan offers more benefits for you and your situation.