What is an Installment Loan?
An installment loan breaks down the amount you borrow into equal payments spread out over several months. The installments are easier to pay back than a lump sum payment or a monthly credit card bill.
Are you afraid to take out a loan? Do you worry that the payments will be too much, that the fees will be too far apart, or that the loan won’t make a difference? Consider taking out an installment loan. For many people, it is essential to weigh the pros and cons before deciding to take out a loan.
However, there is not much to think about when it comes to installment loans. Installment loans provide you with many benefits that you will not find in another type of loan. Installment loans are personal loans that you can take out online and repay over time.
Here are some reasons why an installment loan might be right for you.
1. You Can Customize Your Installment Loan
You can borrow just enough money to cover unexpected expenses or a life emergency, like a medical bill or car repair, without worrying about paying interest on a much larger loan than you need.
It’s also possible to take out an installment loan with a low-interest rate and fixed monthly payments if you don’t want to pay more than what’s necessary over the life of the loan. You’ll know exactly how much interest you’ll be paying by the end of the repayment period, so there won’t be any surprises with your monthly bills.
It is also possible to customize your repayment schedule to fit your needs even if you have seasonal income or work at an hourly job with different hours every week. Installment loans also allow borrowers with bad credit to get cheap personal loans.
They can show financial stability and pay back over time rather than in one lump sum payment as with payday loans. Installment loans with installment payments are flexible enough to support borrowers who prefer to make periodic payments rather than a lump-sum payment each month.
2. Installment Loans are Great if You Need Money Fast
Getting a short-term loan with no credit check isn’t easy. But it’s possible with an installment loan.
Getting approved for the loan is fast because it doesn’t involve a credit check. You only need to provide information about your income and bank account to get started. In some cases, you can even get approved for an installment loan in minutes!
3. Installment Loans Can Be Short-term
With an installment loan, you have the freedom to choose how much money to borrow and for how long. The loan can help if you need emergency cash to pay for an unexpected car repair but don’t want to deal with paying back thousands of dollars over several years.
Short-term loans let you borrow what you need without paying very high-interest rates or being tied to a specific repayment schedule.
4. They are Easy to Understand
The only information you need about your installment loan application is your name, address, income, and bank account information. These are all standard details in applying for a loan from your local bank.
There is no complicated paperwork to sign, no credit check, and no lengthy application process with long waiting periods. You can have money transferred straight into your bank account when you fill out a short application.
5. Installment Loans Help Your Budget
When you apply for an installment loan, your due date is set in stone at the beginning of your repayment period. It allows you to plan and build your budget around what you know will happen when it comes time to repay your bills.
Knowing exactly how much needs to go out of your bank account each month helps you avoid falling behind on your bills or spending more than you can afford. Installment loans allow you to monitor your spending and budget on a month-to-month basis.
6. An Installment Loan Can Help You Improve Your Credit Score
One of the biggest reasons people don’t want to take out a loan is because they’re afraid it will hurt their credit score. But if you have bad credit, especially if you have no credit history at all, then taking out an installment loan can help you improve your score by showing potential lenders that you’re responsible with money and can be trusted.
It can also help you re-establish your credit history to take out other loans later down the road when you need them.
7. They Offer Refinancing Opportunities
When you take out an installment loan and repay the money each month, it improves your credit score, which means you can get approved for other types of loans in the future with lower interest rates and better terms.
Installment loans also have lower interest rates than most other loans, which means less money paid in interest over time. If you can get a better interest rate on an installment loan than what you’re getting on a current loan, you can refinance it to save money.
8. There are Multiple Options Available
There are many different types of installment loans available for you to choose from. Fixed-rate loans allow you to select a monthly payment that fits your budget. Unsecured installment loans are easy to get because they don’t require collateral, like a car title, to prove you’ll repay the money. Variable-rate loans allow you to pay off the loan early if you can afford it.
These options are available to you when you decide to take out an installment loan. You must choose the one that best fits your needs and your budget. Find out how each loan works and ask questions about other criteria before deciding which one to apply for.
With so many options available, the more you know about the various types of loans, the easier it will be to pick one that works with your current financial situation.
There are many benefits to taking out an installment loan. Installment loans give you the freedom to make significant purchases, including automobiles and homes, without worrying about being stuck with payment for years.
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