Borrowing money: installment loan or instant loan?

If you want to borrow money, the banks offer a wide range of financing options. At the same time, there are many new forms of credit from fintech companies that have emerged in recent years. The choice is thus very large for us consumers. Two possible credit types and their advantages I would like to introduce to you in this article briefly.

Pay back the money in small installments with the installment loan

It is an installment loan financing, which is repaid in monthly installments to the bank. Such an installment loan is often used for the purchase of consumer goods, household appliances or home furnishings.

So it is not very surprising that this type of financing is offered especially often by mail-order companies and furniture stores, as well as large electronics stores.

Installment loan and instant credit

In addition to such investments, installment loans offer the possibility of paying off an expensive overdraft facility and balancing one's account. The loan itself is then paid back to the bank in low installments over a longer period of time.

A great advantage of an installment loan is the constant monthly rate and interest agreed with the bank. Depending on the bank, these offer their customers financing between 1.000 euro up to 30.000 euros to. The term is usually between 12 months and 10 years.

Such a loan can be disbursed within a few days. It is very good with such a financing, if no further fees, for example, by a residual debt insurance or by a special repayment accrue.

Straight the remainder debt insurance can cause unnecessary costs and is not always worthwhile itself, for this I have under verbraucherzentrale.De found an interesting article

It can therefore be very worthwhile to compare the offers of the banks with each other. So I found at the bank of scotland, which should serve me as an example, which offers exactly such conditions. Certainly for one or the other might also be very interesting the possibility to apply for an installment loan despite schufa at the bank to be able to.

Due to the advantages of an installment loan, it is used by many consumers very often, which is understandable on the one hand, because many larger purchases can be made immediately and comfortably repaid in small installments.

However, I myself am convinced that one should not overdo it here, as the temptation is very great to artificially raise one's own standard of living. Especially when it comes to smaller investments, it can be worthwhile to save your money and make them only when the money needed is available.

Borrow money with the instant loan in a few hours

As can be deduced from the name, this is a loan that can be paid immediately. Often this form of credit is also called express credit or express credit.

There are several providers and banks that specialize in this type of financing. These offer, among other things, a fast processing of the credit request and can make you very quickly an offer. If you agree, the money can be paid out by lightning transfer on the same day.

What is the purpose of an instant loan? Such loans are intended for when you need to make a larger expenditure within a short period of time, which was not planned in such a way. This can be, for example, the repair of the car, a higher energy bill at the end of the year, the purchase of an important household appliance or a craftsman bill be.

The repayment is then made with the next salary, usually after 30 days or optionally depending on the bank between 60 and 90 days. It concerns here, thus a short term financing model.

The possible loan amount is thereby between 50 and 3.000 euros, which can be borrowed from banks.

If you decide to use such financing, you must be aware that it can be significantly more expensive. This is due on the one hand to the higher interest rates, which can be twice or three times as high and on the other hand, the possible fees for faster payout or the extension of the repayment period.

In return, however, the money can be paid to you on the same day. However, it is recommended to consider whether an installment loan might not be the better choice. Many banks now offer a fast processing and credit decision. Sometimes the money can be paid to you within a few days.

Which financing is better, the installment loan or the instant loan?

From the cost of the installment loan has a clear advantage, because larger amounts of money in small monthly payments over a longer period of time can be repaid. As already mentioned however straight, one should not exaggerate it here however.

Now, however, not everyone wants to commit to a long term and who needs the money only in the short term and very quickly, because a bill must be paid immediately or an investment must be made, so the instant loan offers the possibility to do so.

From my side, I can only recommend everyone to build up a long-term financial reserve. Which advantages this can bring, I have already described in the article: 1000 euros, the small financial independence.