Individuals looking for a fast and easy way to get the cash they need might opt for an installment loan to get them through a bit of hardship, but what is an installment loan and how can it benefit you?
Put simply, installment loans are loans used to pay for things like vacations, basic equipment, or even to purchase a home. Depending on the lender, installment loans can be paid back in a matter of months or years. Larger loans usually offer lengthier payments and take many years to fully pay back, as is the case with most mortgage loans.
Payments on installment loans serve to pay the initial (or principle) loan as well as interest accrued. All loans have terms with specific interest’s rates, and consumers do well to thoroughly analyze these terms prior to signing any loan agreement. Being proactive is crucial to preventing serious issues down the road.
As a generally rule, installment loans use collateral to ensure repayment from borrowers. Collateral can include anything from cars to personal jewelry it simply depends on the amount of money borrowed and the value of the collateral. Payday loans, on the other hand, do not involve collateral. Instead, lenders are given post-dated checks that, in the case of failure to pay or insufficient funds, the loan rolls-over and is extended for repayment in 2-4 weeks depending on pay rate.
Typically, anyone who needs to pay off a parking ticket, a down-payment for a vehicle, or to repay relatives can benefit from an installment loan.
Installment loans are typically more accepted by financial institutions as a credible way to lend money. Payday loans come with significant risk for lenders and often result in hundreds if not thousands of dollars in additional interest fees.
Anyone considering an installment loan should of course, heavily weigh their alternative options before making a final decision.
Did your car breakdown on the way to work? Do you need a way to pay off a small amount of debt but have no way of doing so? Fortunately, there is an easier solution than applying for a 3rd job. One way to make sure you have the cash you need to pay off short-term debt is to take out an installment loan. Installment loans are available to virtually anyone who needs them, and aside from a few minor requirements, there really isn’t anyone who can’t get them.
But how can you determine if an installment loan is right for your situation? A few ways, first you need to critique the reason why you are thinking about taking out a loan to begin with. Is there any other way to make the payment without borrowing money? What options are available to you? Answering these questions will give you a better perspective on the reason why an installment loan looks enticing.
Additionally, understanding how the loan works is also important before deciding whether or not it will work with your needs. For example, if you are self-employed, starting a business, or run the risk of losing your job then an installment loan might not be right for you. Repaying installment loans is dependent upon how you are paid and the stability of your salary. The less stable you salary is, the greater risk you put yourself in by taking out an installment loan.
Like anything else in life, taking the time to properly plan and think ahead will save you time and heartache down the road. If you feel that an installment loan meets your needs then heading down that road can be a perfectly acceptable option. Thinking clearly will secure your future.
If you find yourself in an emergency situation then an installment loan can help you solve your issue quick and painlessly, just do your research before deciding on the right way to solve it.