Difficult situations can come without warning and in those moments, going for an installment loan is the best choice for you. So, what exactly is an Installment loan, and what are its numerous benefits of it? Read the article till the end to find out more about it.
What are Installment Loans?
An Installment loan is a type of loan where you get large sums of money that you need to pay back in agreed-upon installments in smaller payments over a particular time. These loans have a fixed interest rate and can be used for smaller, more significant investments.
Installment loans can be of two types; secured and unsecured. Secured installment loans are given against collateral. The lender ensures that the collateral is entitled under your name to confirm the ownership of the same. In comparison, unsecured loans don’t have such requirements. You don’t need to provide any collateral but must ensure that you can make repayments on the schedule without any struggle or delay.
What are the benefits of an Installment Loan?
Application Process
The application process for installment loans is usually easy. It takes less time to fill out the necessary details in comparison to other types of loans in the market. The approval for these loans is also short following the loan amount. Installment loans for lesser amounts with CashAmericaToday can be availed online at all times, and you can get the funds much faster.
Investments with Installment loans
You can get a good amount of money with an installment loan and use the funds to make reasonable purchases. One can use the money for car repairs, medical bills, property renovations, or purchase extensive home appliances. In addition, you can save yourself enough money to make smaller purchases.
Assured Monthly Payments
The payments for the installment loans are fixed and consistent throughout the loan term, and the lender has no control over increasing or decreasing the installment amount during the tenure.
Similarly, the repayment structure remains the same unless you go for a loan extension.
This makes it easier to keep track of the repayment amount as you make payments at the decided time every month. Thus, you can easily plan your paycheck and budget wisely to do other things over time.
Early payoffs of Loans
One of the many benefits of an installment loan is the flexibility to pay off your loan early. While the payments are fixed during your loan tenure, you may still be able to make extra payments on your loan to pay it off early. Since the interest is calculated on the principal amount, reducing it ahead of time helps to save on the total interest of the loan, and thus, some lenders charge penalties to make up for their loss. So, it is also advisable to make a note of the extra payments and that those payments are not charged as prepayment penalties by the lender. In addition, it’s better to discuss with your lender before making early payoffs of the loan.
Build Credit Score
The credit score is a factor if you opt for a loan from traditional lenders like banks. However, in some cases, you can still qualify for an installment loan with a bad credit score, as some lenders provide loans to give borrowers a second chance to build their credit. During this period, it’s crucial to make loan payments on time as timely payments of loans are a factor in building the credit report. This can boost your credit score with time and help you get back on the right track.
Some lenders report your credit score to the credit bureaus, so an installment loan can help you build a better credit score if you continue to make timely payments.
Installment Loan Examples
The most common types of installment loans include:
- Mortgages
- Personal loans
- Auto loans
- Student loans
- Loans for furniture, jewelry, or car
Installment loans with CashAmericaToday
Applying for any loan can be risky if you borrow from the wrong financial lender. It’s best to lend the money from a trusted direct lender like CashAmericaToday as we offer easy loans to borrowers without any credit checks, and our application process is entirely online without the need for any faxing or paperwork. Our entire application process comes with safe and secured encryption, and applications are approved at the earliest possible so you can get funds when needed.
References: How Installment Loans Work