But what are the benefits of monthly installment loans to the user? And how do they differ from other loans? Well, first off, installment loans will be very predictable compared to some of the other types of debt such as payday loans which can fluctuate depending on a range of personal circumstances. Having an installment loan which you can repay in fixed payments month after month can provide much more stability to the person taking out the loan, allowing for greater budget control and the avoidance of unpleasant surprises.
With installment loans, the lender is taking on the bigger risk, sometimes accepting borrowers without any collateral, which can mean that the interest rates are a bit higher than at the local bank. When you apply for online installment loans with instant approval, you can get evaluated in a matter of hours, and receive an offer for the best rates available. Then, you can decide the size of the online loan that you want, set up your payment schedule according to your needs, and have the funds in your account soon after.
You can instead complete all of the steps from the comfort of your own home. The truth is, most of the conventional loans that people take out can be considered installment loans — basically, any loan that has monthly installments falls under the same umbrella. A personal loan is one of the most popular installment loan options because it can apply to a wide range of situations. Basically, anytime you need money for paying off sudden expenses such as medical bills, a personal loan can be the right solution for you.
They are also a popular option for people looking to consolidate their debt. One of the best installment loan use cases is to go on your personal dream vacation. Life often forces us to delay plans for years because of various circumstances, but with vacation loans, you can enjoy your vacation now and pay off the loan in consistent monthly installments. Sometimes, you may find yourself in need of a loan to fix up your house. If you are thinking about applying for an installment loan there are pros and cons to consider first.
Here's what you need to know before taking one out. An installment loan provides a borrower with a fixed amount of money that must be repaid with regularly scheduled payments. Each payment on an installment debt includes repayment of a portion of the principal amount borrowed and also the payment of interest on the debt.
The main variables that determine the amount of each regularly scheduled loan payment include the amount of the loan, the interest rate charged to the borrower, and the length or term of the loan.
The regular payment amount, typically due monthly, stays the same throughout the loan term, making it easy for the borrower to budget in advance to make the required payments. Borrowers generally have to pay other fees in addition to interest charges, such as application processing fees, loan origination fees, and potential extra charges such as late payment fees.
Common types of installment loans are auto loans, mortgage loans, personal loans , and student loans. Other than mortgage loans, which are sometimes variable-rate loans where the interest rate changes during the term of the loan, nearly all installment loans are fixed-rate loans , meaning the interest rate charged over the term of the loan is fixed at the time of borrowing.
Installment loans may be either secured collateralized or unsecured non-collateralized. Mortgage loans are collateralized with the house the loan is being used to purchase, and the collateral for an auto loan is the vehicle being purchased with the loan.
Some installment loans often referred to as personal loans are extended without collateral being required. Loans extended without the requirement of collateral are made based on the borrower's creditworthiness , usually demonstrated through a credit score , and the ability to repay as shown by the borrower's income and assets.
The interest rate charged on a non-secured loan is usually higher than the rate that would be charged on a comparable secured loan, reflecting the higher risk of non-repayment that the creditor accepts. If you're considering taking out an installment loan, you may want to first check out a personal loan calculator to determine what kind interest rate you'll be able to afford.
A borrower applies for an installment loan by filling out an application with a lender, usually specifying the purpose of the loan, such as the purchase of a car. The lender discusses with the borrower various options regarding issues such as down payment , the term of the loan, the payment schedule, and the payment amounts.
The lender also reviews the borrower's creditworthiness to determine what amount of credit and what loan terms the lender is willing to offer. The borrower ordinarily retires the loan by making the required payments. Borrowers can usually save interest charges by paying off the loan before the end of the term set in the loan agreement. Some loans impose prepayment penalties if a borrower pays off their loan early. Installment loans are flexible and can easily be tailored to the borrower's specific needs in terms of the loan amount and the length of time that best matches the borrower's ability to repay it.
These loans let the borrower obtain financing at a substantially lower interest rate than what is usually available with revolving credit financing, such as credit cards.
This way, the borrower can keep more cash on hand to use for other purposes, rather than making a large cash outlay. For longer-term loans, a disadvantage is that the borrower might be making payments on a fixed-interest loan at a higher interest rate than the prevailing market rate.
The borrower may be able to refinance the loan at the prevailing lower interest rate. The other main disadvantage of an installment loan stems from the borrower being locked into a long-term financial obligation. At some point, circumstances may render the borrower incapable of meeting the scheduled payments, risking default , and possible forfeiture of any collateral used to secure the loan.
Paying off an installment loan on time is an excellent way to build your credit. Payment history is the most important factor that contributes to your credit score and a long track record of responsible credit use is good for your credit rating.
As mentioned earlier, your credit score can take a hit if you don't make timely payments or you default on the loan—which is also a red flag in the eyes of lenders. An installment loan can help you finance a major purchase, such as a car or home.
Like any loan, there are pros and cons to consider. Advantages include flexible terms and lower interest rates, while a major disadvantage is the risk of default. Advance America I appreciate you all.
You were there when I needed you most. I was stuck in Cleveland Ohio from a hospital visit. Thank You! Kay Rice. Apply Now. Repayment of your Installment Loan will take place on each installment due date, which typically follows your pay dates, via auto withdrawal from your bank account or cash payment at your location.
Depending on your state, repayment will take place anywhere from 3 to 36 months and generally coincide with your pay date. Typically, your loan payments are aligned with your pay dates. During the loan process, we will review the specific due dates and amounts associated with your loan to ensure you understand the terms of the agreement before finalizing. There is no penalty for paying off your loan early and doing so may decrease the overall cost of your loan.
Please contact us at your local store or call — if you are unable to make your Installment Loan payment on time. Advance America will work with you to establish payment arrangements for your Installment Loan. And we're committed to collecting past due accounts in a professional, fair and lawful manner.
Past due payments may impact your ability to transact with Advance America and other lenders. Installment Loans Enter your state to find available loan options. Not in? Installment Loan Overview. Installment loans get you money now that you pay back over time. The Advance America Installment Loan advantage. A 5-star customer experience has made us a leading provider of consumer financial services for millions of Americans since Read Customer Reviews.
Our knowledgeable staff and personalized money solutions make getting cash as easy as can be. Whether down the street or right from your phone, the money you need is always within reach. See All Locations. How do Installment Loans work? Pay back your loan in a way that fits your needs. Find a Store. Good credit not needed Advance America looks beyond just your credit score, so you may not need a good credit score to get approved for an Installment Loan.
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