An installment loan is not your typical payday loan. Payday loans are repaid with just one lump-sum of cash, whereas an installment loan is paid back in increments. The payback schedule can then stretch over the course of many years or months. This extended payback period usually means that borrowers can handle taking on a larger sum of money than with your standard payday loan.
How the installment loan works
One of the best things about an installment loan is that they are flexible. Options for these loans can depend on many things including where you live and how high your income is. A now popular method of acquiring an installment loan is by going through an online lender. So long as you are 18, and are employed with an active checking account, the online route should work for you.
If you have a steady income and a decent credit score, you may have the choice of deciding how much money you will borrow. With every installment deal comes a payback period as well, which can also sometimes be negotiated. The logic is simple; do not borrow more money than you need. Though it may be tempting to get a larger sum, this only means you will end up needing to pay more overall.
When deciding on the repayment period, choose the shortest timespan possible. It might seem convenient for someone on a tight budget to go for the longest timespan in order to have smaller incremental payments. However, doing this increases the amount of money you will pay overall. It is therefore in your benefit to get the shortest window you can, despite the higher monthly payments.
Why get an installment loan
Installment loans can be the best solution for someone looking to pay for an expense like a car, emergency medical fees, or home renovations. While these expenses are quite large, they are not so large that going into debt to pay them off will stay with you for more than a year or two.
Installment loans can be the best method for taking care of unexpected events in your life. Unlike most other payday style loans, people with lower incomes have flexibility in their payback method. This allows them to extend their period to get a rate that is most comfortable.
Installment loans are never recommended for frivolous and minor purchases. Recognize that a loan is an important financial decision and can have serious consequences. Borrow the minimum amount possible and make sure it is only what you truly need.