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Pay monthly loans

Pay monthly loans

There comes a time in everyone’s lives when we need a little support. It’s times like these when a pay monthly loan can make a huge difference. Whether it’s for your daughter’s wedding or for a new car, loans you pay back monthly are an ideal way to manage your outgoings.  

Anelda Knoesen
From the Money team
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Posted 22 NOVEMBER 2019

What exactly are pay monthly loans?

They’re pretty much exactly what they sound like – easy to manage loans that you pay back monthly. It's just another name for a typical loan from a bank where you pay back regularly – usually by Direct Debit. 

It differs from a credit card where you might pay different amounts according to what you’ve spent and if you pay more than the minimum payment

What are the benefits of paying monthly loans?

Paying monthly loans have many advantages, one of them being the flexibility of the repayment period you choose at the start of the loan.

Paying back a loan monthly means you can look at different options for how long you take to pay back the loan to make sure the monthly amount is affordable before you decide on a particular loan.

With a pay monthly loan, you simply set up a Direct Debit for the monthly repayments agreed with the lender. This can help you budget as you know exactly how much is going out of your account every month for the length of the loan.

Pay monthly loan rates

Our example shows how paying back a £3,000 loan over a longer period can bring down the monthly payments. However, be aware that by choosing a longer term, the overall amount you pay back will increase.

Amount you borrow APR rate Borrowing period (in years) Monthly repayments Total you'll pay back
£3,000 5% 2 £131.51 £3,156.24
£3,000 5% 4 £71.15 £3,415.20 (an additional £258.96)

What’s the best pay monthly loan to get?

This all depends on why you need the loan, your disposable income and how well you can manage the repayments. 

But it’s always best to take out a loan with a low APR, and with as short a timeframe as you can comfortably manage to pay back the funds as possible, so you pay less interest

If you find yourself in a fortunate situation where you have a bigger disposable income than you anticipated, you could pay off more of what you owe, faster. But make sure you check your terms and conditions as sometimes early repayment can come with a charge.

What do I need to do to get a loan?

To apply for a loan, you'll need to meet certain requirements.

You'll generally need:

  • Be at least 18 or above (for some providers its 21 and some also have upper age limits)
  • An income (job or benefits)
  • A valid UK address
  • A valid bank account

Can I pay back my loan early?

Yes, but you may have to pay a penalty to do so. Often it's best if you try and do so you'll be debt-free – but some loans can charge an early repayment fee. When you take out your loan the lender should let you know what will happen.

The advantage of paying off all or part of a loan sooner rather than later should mean you pay less interest overall.

If you intend to pay off your full loan amount, you'll need to contact your lender and ask for an early settlement amount. This the total sum needed to repay the loan. You then have 28 days to pay it from when your request is received. The lender will let you know if any fees are repayable, so you can decide if you want to go ahead.

If you think you may be able to repay early, then it might be worth looking for a loan that doesn't include this kind of fee. If you want to pay off part of your loan, your credit agreement may be clear about how any partial early payment will affect your remaining repayments.

If it isn't then you can negotiate with the lender about whether you reduce your regular instalments or pay back the rest of the loan over a shorter period.

It's best to check the terms and conditions of your loan as there may be a charge for paying your loan off quickly.

Before getting a pay monthly loan what should I consider?

Before you decide on a loan make sure you're in a position to comfortably pay it off.

Pay monthly loans can make the process easier to manage, but you should always be able to afford regular repayments, alongside life's essentials.

Where can I find the best loan for me?

All you need to do is work out how much you want to borrow and over how long. We'll do all the leg work for you with our comparison service to find you the best value loan. It's easy to see if you can use the loan for debt consolidation, if repayment holidays are allowed and if there any rules about repaying early. So, get comparing and see what you could typically expect to pay every month for the loan you need.

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