If you’re looking for a way to acquire money quickly, a good option to consider is an installment loan. These loans are used by individuals for numerous reasons, such as to buy homes or pay late bills. Before looking for an installment loan, though, it’s essential to know what they are, their benefits, how they differ from credit cards, and how to get one.
Installment Loans – What Are They?
An installment loan is an amount of money that you borrow from a lender and is repaid over a period of time through monthly payments. These payments are fixed, meaning they will remain the same until the loan has been paid in full, though the interest rate will depend on multiple factors.
These loans can either be secured, which is when some form of collateral has been documented as payment if the loan is not paid, or unsecured, in which no collateral is offered. They’re paid in a single lump sum, so you won’t have to worry about constantly adding onto your debt unless you take out another loan.
Types of Installment Loans
It’s likely that you have a bit of experience with installment loans already, as they are common throughout the world. Loans vary depending on the purpose, but there are many common loans that you may not have known are considered installment loans. Types of installment loans include auto loans, student loans, mortgages, and personal loans. Some of these loans offer a fixed monthly payment alongside fixed interest rates.
Online installment loans with instant approval are a type of personal installment loan that doesn’t need to be spent on a specific product of service. Mortgage loans, for example, are used specifically for the purchase of homes and properties. However, when you apply for online installment loans, instant approval means that you can spend your money on whatever you like.
Benefits of Installment Loans
There are numerous reasons you may consider an installment loan beneficial, including fixed interest rates. These loans also help to diversity credit, increasing your score if they are paid on time. On top on these benefits, you would also have a monthly payment that never fluctuates.
Installment Loans vs. Credit Cards
Credit cards are similar to installment loans in that they both can be used for whatever purpose you desire, but there are some key differences to keep in mind. Credit cards are just as common as installment loans, so let’s take a look at what makes them so different.
Monthly payments: Credit card payments can fluctuate on a monthly basis depending on the interest rate as well as the balance on the card. In contrast, installment loans require individuals to pay a fixed payment that will be the same amount until the balance has been paid off completely.
Availability of funds: Credit cards provide users with a fixed amount, their credit limit, which can be raised depending on your repayment history. With these cards, your available cash is based on the current balance of the card. Installment loans are paid in a lump sum, though you can add to your loan by sending in another credit application.
Interest rate: Many credit cards offer variable interest rates that can change depending on promotions, late payments, and other factors. Installment loan interest rates are fixed, so they stay the same throughout the duration of your loan repayment period.
How to Get an Installment Loan
Traditionally, you would need to speak with a lender, either on the phone or in person, about acquiring a loan. The process may take several more meetings and weeks of waiting before being completed, at which time you will know whether you have been approved or not. How long it takes to receive funds varies depending on your lender, so there’s no telling how long the entire process will take.
In contrast, online installment loans only take a few minutes. First, you must find a trustworthy lender navigate to the application page. From there, users fill in their information, including weekly, bi-weekly, monthly, or yearly income. Additional information will also be required, such as your current employer, to verify your source of income.
Once you’ve filled in all of the information, your application will be processed, and you’ll be notified of your approval status almost immediately.
Installment loans can be an excellent way to quickly get the funds you need to handle anything life throws at you. They are manageable and you’ll know exactly what you’re paying each month, unlike credit cards and loans with variable interest rates. They’re also beneficial in several ways and can raise your credit score if managed properly.