If you have been browsing the internet looking into different forms of credit and loans then you may have heard of installment loans. What are they exactly? These forms of loan are where you take out a distinct amount of money when you agree upon the loan. After that, you will make monthly payments on the loan until it is completely paid off. Now there are such things as revolving credit like credit cards and lines of credit. Now unlike these, an installment loan is a single amount of money and you can not take out any further money. You can not increase your debt unlike credit cards and lines of credit. Once you have borrowed the money you will pay the money back over an agreed upon amount of time. When you have made all of the payments your debt will be completely paid off.
There are many different formats of installment loans and these can include things like automotive loans, house mortgage loans, and student loans to name a few. Each will be explained below.
Auto installment loans
These types of loans are repaid on a monthly installment plan that is typically between 12 and 96 months. It is typical that loans with longer repayment periods, have smaller payments but higher interest. If you were to purchase a vehicle you would pay less interest if you repaid the loan faster. For example, if you were to purchase a vehicle over 96 months you would pay much more rather then paying for a 48 month loan.
House mortgage installment loans
A house mortgage is a type of installment loan where you would borrow the money to purchase a house. These loans are usually for 15 to 30 year long periods. Many people choose mortgages that have a flat interest rate. This means that they will pay a flat rate on interest fees as well as the principal on the house itself.
Personal loans
A personal loan is a form of guaranteed approval bad credit installment loans that many people will use. People will use these loans to get themselves out of debt, while others will use them to pay for post-secondary education. Other people may use personal loans to pay for unexpected expenses like vehicle repairs or medical costs. These loans usually have a higher interest rate because they do not require any form of collateral unlike other types of loans or credit.
The positive elements of installment loans
Now many people will choose installment loans over other forms of loans or credit. There are many reasons why people will make this decision. By taking out an installment loan, you are paying a fixed-rate on your loan. This means your principal payment and your interest payments never change. Another great thing is that it is easy to budget to pay off your debt. Another positive attribute is the fact you will know the exact date your loan can be paid off. Lastly, you can’t get any further into debt like forms of revolving credit like credit cards and personal lines of credit. When you have made the required payments, your loan will be paid off and you will be out of debt.
The negative elements of installment loans
These kinds of loan can also have potential problems with them as well. To begin with, if you were in need to borrow further money you would not be allowed too. Unlike lines of credit and credit cards, you get a flat amount to borrow and can not increase this amount. When you are searching for one of these loans be sure that you take out the exact amount that you need. Another issue with these loans is that the interest rates can be affected by your credit rating. If you have bad credit or no credit at all, you may pay more money in interest from most loan stores. Luckily at our website we help people who don’t have the best credit or no credit at all. We don’t use credit checking networks or bureaus which means we can still help you. Other then interest, an installment loan can also come with added fees and possible penalties. These can include things like application fees, choosing to pay for insurance on the loan as well as prepayment penalties.
