There are many different types of loans that borrowers can choose from. Car title loans, payday loans, consolidated loans, mortgages, personal loans and loans from insurance policies are all examples. Many of these loans are considered installment since the payments to the lender are scheduled in equal amounts each month. Let’s take a look at what an installment loan actually is, its pros and cons, the different types of installment loans you can choose from and other information you’d want to have before deciding whether or not to go for it.
What is an installment loan?
An installment loan is a loan in which the principal and interest are repaid in equal amounts at scheduled intervals, normally over a rather long period of time.
Online installment loans are usually considered to be safer and more affordable than payday and title loans. Another feature that makes them favorable compared to other types of loans is that getting installment loans for bad credit is not only possible but is quite common and easy to obtain. The repayment terms of an installment loan can be as soon as few months or as long as 30 years. Installment loans online are normally secured by the personal property of the borrower.
Different types of installment loans
Car installment loans
Usually, when going to college or starting a job, you may need a car. However, you sometimes don’t have the money to afford one. Taking out a car installment loan is a valid option – you only need to make sure that you pay back the money as scheduled so that you don’t put your car at risk of being taken back.
Student installment loans
With student installment loans, what you get is a designated amount of money for your educational costs. Once you’re out of school, you ‘ll start paying it back with a fixed amount each month. Student installment loans also allow the option of deferring payments when you are unemployed for a period of time. You will, however, still have to start repaying once you are employed again.
Unsecured Installment loans
They are usually for small amounts of money and have higher interest rates. However, they are the most popular type of loan found online since these are usually loans with no credit check or even if your credit gets checked, you can still get a loan. These types of Installment loans are usually for a short period of time of no longer than 5 years.
Mortgage installment loans
Buying property is hard and it’s almost impossible to buy one without borrowing money from somewhere. Since there are many different types of lending companies, it’s important to consider your options. With a mortgage installment loan, you’re able to pay back the borrowed amount over a number of years. Much like with car installment loans, you need to be careful with your repayments and make sure they are on time or you risk losing your property or damaging your credit.
Installment loans pros and cons
There are different pros and cons of installment loans that can turn the scales in your decision-making from one side to the other.
Installment loans pros : Predictable monthly payments
When you take out an installment loan, there is a fixed interest rate. Your payments will be the same throughout the lifetime of the loan because the interest rate is already set up at the time when you take out the loan. You will know exactly how much to pay every month.
Longer terms
The repayment terms of an installment loan can be as long as 20 years or even longer.
Easy and fast
It’s very fast and easy to get your hands on the money when you take out an online installment loan. Normally, you can get your money transferred directly into your account in just a couple of days after being approved for the loan.
Installment loans cons
High interest
Even though the annual percentage rate of an installment loan is not as high as that of a payday loan, it’s still going to be high. After making all the payments, you can even end up paying more than you would with a payday loan.
Penalties for missed repayments
If you fail to make your repayments on time, it can cost you a lot more than you thought.
Personal property risk
There are types of installment loans that require you to put up your personal property as collateral.
When to take out an installment loan
Research is important
There are many things you should carefully consider before applying for an installment loan. You have to be sure of your choice of lending company. You have to ensure that the company you’re applying for your installment loan with has the licenses needed to run a lending service. This information can easily be found on the company’s website. Anyone interested in installment loans should check this before going any further.
How does it work
When applying for an installment loan, it’s important to take note that installment loans are serviced locally. This means the lending institution that you have chosen must operate in your area of residence. After your application for an installment loan has been approved, it takes no more than one business day for the money to be deposited into your bank account.
Conclusion
Installment loans are a good option to help you get your financial life back in order. Just like applying for other types of loans, you should do your research, as choosing the right installment loan lender is important and should
