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This content is for informational purposes only and is not intended to provide financial advice.
Have you ever taken installment loans? If not, then you have to keep reading. Installment loans can be of good help, especially to you, the borrower. Installment loans can be of good use, especially if you want good payment plans.
In this post, I will bring t light the main advantages of installment loans. But first, I need you to understand more about installment loans.
What Are Installment Loans?
If you take a loan in lump sum amount, then start paying back in small bits, I would call that an installment loan. Whatever you agree with the lender to be paying either biweekly or monthly is called an installment.
In most cases, the installment amount depends on the total amount of the loan plus the interest rates. The lender can divide the total repayment amount to get an expected installment value that you will be paying.
Installment loans instant approval can be secured or unsecured. A secured installment loan involves the borrower providing an asset in exchange for a loan. Once you don’t repay the loan, the lender will repossess the asset.
However,
What Are Some Examples Of Installment Loans?
- Personal loans
A personal loan is a loan that you take and sign against your name. In most cases, personal loans are unsecured, and you can pay in small bits till you finish. You can take 3-7 years to repay a personal loan, depending on the total loan amount, of course.
- Mortgage loans
A mortgage is a loan that you take whenever you want to buy a house. However, mortgages take more than 15 years to complete the repayment process. Therefore, they are installment loans.
- Auto loans
An auto loan is a loan that you take whenever you want to buy a vehicle. Indeed you cannot take an auto loan and repay it all at once. Instead, you will repay in small installments for at least three years. At most, you can repay an auto loan for seven years.
Those are the three main types of installment loans.
Now, What Are The Main Advantages Of Installment Loans?
You Get a Massive Amount Of Cash
In most instances, installment loans are associated with vast amounts of cash. However, if you take an installment personal loan, you can do whatever you want with the money.
And that means that you can accomplish a long-term financial plan since the cash is much. However, it will be a good idea only to take an installment loan that you can comfortably repay.
Flexible Payments
If there is something that can ruin your credit score is late loan repayment. For instance, you can only pay for payday loans in one payment-usually in your next payday.
But with installment loans, you pay a small amount of money depending on your agreement with your lender. This means that you can plan and know how much you can save.
Fixed Payment Amount
If the lender decides that you will be paying $200 per installment, that doesn’t change took you to complete your repayment period. Since you know how much you will spend in repayment, making a reasonable budget will be easier.
In addition, you will be able to plan your finances and know what projects you can do with your current finances.
You Can Repay Early
If you have to repay your loan early than the time set on the contract, you can do so with installment loans. However, you have to talk with your lender first.
Some lenders will charge you early repayment fees if you pay early. But the costs may be less than the interest that you could have repaid if you had waited for the whole loan term. But others will be more than willing to accept their money back.
You Can Refinance The Loan
If you happen to get a lower interest loan, you can refinance the old one. It means that you will repay the old installment loan in full and start with a new installment loan.
Loan refinancing is a good idea, especially if you are on the verge of losing your asset if it was a secured loan. However, you should only refinance if you get a lower-interest loan than the one you have.
My Take
An installment loan can help you with adequate financial plans. But it will be good if you have a stable income that you will use to repay the loan. Otherwise, repaying a loan for a very long time brings more chances of defaulting. However, that can only happen if you lose your sources of income.
For instance, if you have a loan like a mortgage loan that you will pay in 20 years, a lot can happen on the way. And that’s why your finances should be more stable. Remember, chances of losing the money you had repaid plus the home are high if you have no regular income.
That’s why it will always be an excellent idea to have more ways to get money because that will help you be stable.
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Thank you for providing such an informative and useful article!
I believe that such loans are one of the best a person can take