Installment Loan Overview
Installment loans can be great alternatives to payday loans. These types of loans are popular because of their flexibility. But how exactly do they work?
What are installment loans?
Installment loans offer a simple method of short-term borrowing. These loan types can be helpful for solving short-term liquidity problems or covering an emergency cash crunch. They are often multi-payment loans that repaid over a period of time through regular fixed payments or installments, hence the name “installment loans”.
Each payment typically includes repayment of part of the principal amount borrowed plus payment of the interest. The main factors that determine payment amount include the borrowed principal, the interest rate charged, and the length or term of the loan.
The process of applying for an installment loan is simple, you are often required to fill out an application and submit it to the lender, and you may get a decision on your online loan application within a few minutes.
Advantages & Disadvantages of Installment Loans
Advantages of Installment Loans
Manageable installment payments
Installment loans have various advantages that make them appealing. To begin with, these types of loans are small and manageable, making them suitable for many people, including low-income individuals.
APR remains fixed with no unforeseen surprises
The annual payment rate (APR) for Installment loans remains fixed throughout the whole repayment period with no unforeseen expenses. Fixed APR alleviates the worry customers may have about an increasing rate as it is the case with payday loans. Our rates page provides an example of a repayment plan for a $500 loan for your convenience.
Installment loans come with longer terms. They can be classified under long-term range because lenders can offer you the chance to repay the loan over a longer period which you can efficiently manage.
Quick loan approval
The requirements for installment loans are also relatively simple. Consequently, the processing time is quick. It can take less than two weeks to get funding from installment loans, once you have been approved. On many occasions, you can get the money as fast as 48 hours (subject to approval).
Open to borrowers with poor credit
Do you have poor credit? You do not have to worry because installment loans are often offered to consumers with poor credit. In addition to other conditions, you need to prove to the lender that you have a reliable source of income which will enable you to repay the loan as scheduled.
Despite the many advantages of installment loans, they do have some limitations. Just like with other types of loans, default and late payments can result in consequences and additional fees. Borrowing rate can also be higher than traditional bank loans. However, the installment schedule is usually favorable, giving customer sufficient time to organize funds for loan repayment. In order to make a good decision, customer must review everything very carefully when applying for an installment loan.