An installment loan is a financial product that allows people to borrow money and pay it back over time. The loan usually has a fixed interest rate and requires the borrower to make periodic payments.
Longer repayment terms, a larger loan amount, and efficient application are some of the many reasons people tend to opt for personal loans. Before moving on to the other benefits, it is essential to know the most common types of installment loans.
Types of installment loans
Auto loans are a type of installment loan that should be applied when planning to purchase a car. Usually, this type of loan is repaid within 12 to 96 months. However, keep in mind that not all lenders have the same monthly payment term. Typically, loans with a longer repayment term have a lower interest rate, while loans with a shorter repayment term have a higher interest rate.
While auto loans are for the purchase of cars, mortgage loans are for the purchase of a home. Most mortgages typically have a repayment term of 15-30 years, a fixed interest rate, and fixed monthly payments that often don’t change.
Personal loans can be used for various purposes. You can get this loan to consolidate your debt, pay sudden bills, or finance a large purchase. Typically, personal loans must be repaid within 12 to 96 months. A downside to personal loans is that they have a high interest rate, as lenders often don’t need collateral, unlike auto loans and mortgages.
Benefits of installment loans
As mentioned above, there are several reasons why many people prefer installment loans over any other type of loan, including repayment tenure, higher loan limit, and efficient application as some of the benefits. Here’s a look at why an installment loan may be the best for you.
Higher loan limit
Because installment loans offer a more comprehensive repayment schedule, banks and other lenders may give you a higher loan limit. This is an incredible advantage when you need a lot of money, especially in an emergency. Also, a higher loan limit eliminates the possibility of applying for multiple loans in the future.
Quick and easy to apply
Applying for an installment loan can be done in person or online. Most people prefer to apply online because it is quick and provides an immediate response soon after applying. Take CreditNinja, for example. They provide a software application targeted at borrowers, which can be ideal for people who don’t want to leave the comfort of their home.
Many lenders offer a quick credit check which speeds up the process and approval. Once you have been approved, they will deposit the money directly into your bank account as soon as possible. They also offer flexible payment terms depending on the type of loan and payment plan you have applied.
Options for each credit score
Even if you have had bad credit or financial difficulties in the past, you can still apply for an installment loan. Many lenders do not view a credit seeker’s credit rating as their only deciding factor. An applicant may submit other essential documents such as pay stubs, pay stubs or billing slips to serve as additional criteria for creditworthiness.
Apply at any time of the day.
Banks and other traditional lenders follow certain normal business hours between 9 a.m. M. and 5 pm M. This means that they cannot always be accessed 24/7. Fortunately, online lenders offer 24-hour service. If an unforeseen situation arises and you need cash fast, all you need to do is go online to apply for a loan online.
If it is a large amount of money and you need to create an additional banking window, you may have to wait until the next day. The good thing is that you no longer have to spend time in the bank since your request has already been processed.
Flexible repayment terms
One of the main advantages of installment loans is that they offer a low borrowers affordable payment terms. Instead of paying a large sum all at once, the borrower can repay the lender in higher fixed rate payments.
online installment loans instant approval can be a solution if you need immediate cash flow, not to mention flexible payment terms. It is good for borrowers who only intend to borrow money in advance. Be careful not to treat installment loans like payday loans. As with any type of loan, an installment loan will not affect your credit, as long as you always pay on time. Never think about refinancing so you can extend a payment date. Otherwise, your debt will increase.