Financial emergencies can be hard to deal with. This could be related to an unexpected medical bill, or sudden need for car repairs. Or maybe, you just want to finance a small weekend trip with your partner. If you need immediate money, allotment loans can be an option. Allotment loans are ideal for federal government employees, who don’t have a great credit score, or need money that can be paid easily in installments. Unlike payday loans, allotment loans for government employees are repaid over a period of time in monthly installments. Here’s what you need to know.
- Types of allotment loans
In general, allotment loans are categorized in two segments – discretionary and non-discretionary. In case of discretionary allotment loans, the borrower has the flexible option to decide on the amount to be taken from paycheck every month towards loan repayment. There is fixed term for this – the borrower can repay a part of the loan through other means, as well. Non-discretionary loans, on the other hand, have a fixed installment to be paid every month, decided by the lender. In both cases, the money is automatically deducted from the borrower’s account.
- Why consider allotment loans?
For government employees, allotment loans are a great option, because they are more likely to get qualified, when compared to private sector employees. The lender is assured that the employee has a stable job, and even if his salary is lower than his private sector counterpart, the loan will be eventually repaid. In other words, job security and stability matter to the lender. With allotment loans, you can use the money for almost anything, and unlike payday loans, where the money must be paid in weeks, you have the time with such loans to repay in easy installments. This ensures that your finances are not strained.
- Are there any disadvantages?
While allotment loans are easy to apply and get, the interest rate of any form of quick lending is high, so make sure that you use the option, only when needed. The money must be repaid, so you may have to handle your monthly finances in a way to reduce the expenses.
Government employees can get allotment loans easily, even when they don’t have a big paycheck or great credit score. Just check the terms and conditions, before you sign up, and ensure that your repayment plan is suitable to your other payment plans.