Last updated: 16/10/2020 | Estimated Reading Time: 4 minutes
In general, loans can feel pretty restrictive. You’re bound to set repayments which, if you stray from, can rather swiftly cause you financial trouble you’d rather avoid. Enter the flexible loan, here to aid you by functioning more… flexibly. Let’s take a look.
In This Guide:
- What are flexible loans?
- What are the benefits of flexi loans?
- How do flexi loans work?
- Can I get a flexible loan with bad credit?
- How do I choose a flexible loan?
What are flexible loans?
Within certain parameters, flexible loans allow you to borrow as much as you like for as long as you like. You can vary your repayments by increasing or decreasing the amounts as needed. This means that if money is particularly tight one month, you can rest easy knowing you won’t plunge into unmanageable debt by not being able to meet your repayments.
What are the benefits of flexi loans?
Flexible loans offer some pretty impressive benefits which you rarely find with standard personal loans. Let’s take a look at these:
- Payment Holidays: First, flexi loans offer payment holidays. Even the most meticulous budgeters may on occasion need some relief. A payment holiday means that you can forgo your loan repayments for a short time without fear of penalty fees. You’ll still be charged interest on your total loan balance, but knowing you won’t spiral further into debt or have your credit score drastically harmed is one reason why a payment holiday can be a real perk.
- Early Repayment: Another advantage of flexi loans is the early repayment options. When you take out a loan, you’re bound to set repayments on a strict plan that’s agreed between you and the lender. Because the lender makes their money off interest, you can’t just pay your loan off early – at least not without being charged – even if you want to clear your debts. Many flexi loans allow you to make early repayments without being charged.
- Overpayments: Last, with flexi loans you can make overpayments. These allow you to pay back more than your set monthly repayments, meaning less time accruing interest and the faster your balance is paid off.
How do flexi loans work?
Flexi loans allow you to withdraw money as and when you need it, up to a set amount. They work by money being transferred from your loan to your bank account, which you pay back as and when suits you.
With flexi loans, you’re only charged interest on the amount you actually borrow, which is great if you’re not entirely sure how much money you need. Let’s contrast this with a standard loan. For example, you take out a £3,000 but end up only needing £1,000. Despite this, you’re still paying interest on the entire loan – in this example £3,000. This isn’t the case with flexi loans.
To have this flexibility, surely there’s got to be a catch? Well, you’re right. When you compare loans, you’ll notice there aren’t actually many of these on the market, meaning that interest rates tend to be quite high.
Can I get a flexible loan with bad credit?
If you’ve got a poor credit score, then you’re probably aware that finding cheap loans isn’t always plain sailing. Often, once your credit rating is taken into account, you’ll find that lenders will only lend at what are, at times, prohibitively high rates of interest.
But a flexible loan can be a gift for those with bad credit. Knowing you won’t incur penalty fees can bring peace of mind, as can having the opportunity to pay off your balance early if you can. In fact, you even have the option to save money on your overall loan cost by making overpayments. Also, if you keep on track then you could see your credit score improve.
How do I choose a flexible loan?
Not every flexible loan will offer all the benefits we describe – some may focus just on offering their customers payment holidays, for example. If flexible loans sound like the right deal for you you, then run a loan comparison with us by using our search tool. Pay close attention to the terms, conditions and extra incentives of our providers’ deals to be sure you get what you’re after.
As with any loan, you should think carefully about your finances to be sure you can meet minimum repayment requirements. Not doing so can mean debt quickly racks up and it’ll be harder to be accepted for any loans in the future.