This type of credit enables an individual to borrow what they need and pay it back over a fixed period of time. It can help with raising larger amounts of money over a longer time period. For example, you could borrow $5,000 over three years or over, paying back the loan in installments each month. In fact, you can borrow anything from $3,000 to $50,000 in this sense depending on the loan company of course.
The rate of interest, in this case, will be much different from that of a payday loan whereby you borrow generally for no more than 31 days. It also means you can shop around to get the very best rate. An installment loan gives you much more flexibility, and you can pre-plan as to what you can afford to pay each month. Clients need to be disciplined, however, and of course, they will carry the debt for much longer periods of time. If this is controlled then there won’t be a problem.
The loan company will almost certainly provide you with some sort of calculator so you can work out initially what you need. They’ll schedule this so you’ll know if you borrow, $4,000 over a four year period, you’d need to pay back, for example, $120 each month including interest etc. The payments will vary according to the amount you need to borrow and from company to company.
Once you sign the paperwork you are bound by a credit agreement under the law, so make sure you know all about the small print and exactly what is involved. You should note, this is all done not only to protect the lender but also to protect the borrower.
Installment loans can now vary greatly as opposed to simply getting a long-term loan from your bank. You should be clear about what you need as there are now some larger payday loans that allow you pay back what you owe over six to 12 months for example.
These can actually be very manageable for those who need a few hundred dollars or slightly more. That said, you can also pay a lot more overall depending on borrowing charges and interest, so you must be careful when shopping around, and always make a note of the most reputable lenders.
It is possible in certain cases you can get a smaller installment loan without undergoing a credit check, but of course this is generally rare. Most banks and loan companies will take a look at your rating before borrowing. After all, if they are lending for longer time periods, they’ll need to feel confident they’ll get the money back. One thing is for sure, if you make the payments on time each month then your credit score will certainly improve.
Installment loans carry many varied benefits and you can:
- Get the cash you need quickly if you fulfill the requirements of the loan provider.
- Raise larger sums of money you don’t currently have access to for long-term projects or needs.
- Be flexible about what you pay back monthly.
- Have much longer to pay the money back very comfortably.
- Solve your current financial problem over the longer term.
- Get a smaller sum of cash and pay it back over a six to 12 month period.
- Get the opportunity of having a flexible way of borrowing money.
Installment loans can even help you consolidate debt you may already have, but always think about this very carefully before proceeding. In short, they are loans built around a carefully constructed plan so you can organize your own financial requirements accordingly. They provide great flexibility for the borrower.
As with any type of credit always be sure you can meet the payments and plan as far ahead as possible. Only borrow what you need and over the shortest time period. Follow these golden rules and you’ll find an installment loan can be an invaluable tool. Make the payments on time and you’ll almost certainly find the loan company will be there to help you in future, once the initial loan is paid back.