Finding the correct loan can be difficult if you require immediate cash. Fortunately, some lenders focus specifically on providing credit to applicants with bad credit. An example of one of these loans is an installment loan. With these loans, you can take out a fixed sum of money and pay it back over time in equal increments.
Flexible Payment Options
Unlike lines of credit and other revolving products, installment loans come with a set amount of money disbursed upfront. The borrower then repays the loan amount and any interest due in fixed monthly payments.
This is great if you need a quick fix to a problem, like an unexpected car repair, that requires an immediate cash injection. Similarly, if you need to cover emergency travel expenses for a family member who is sick or injured, installment loans can help. The flexibility of repayment terms with installment loans, from months to years or even decades, also makes them a good choice for covering larger expenses like mortgages, home improvements, and student loans.
Lower Interest Rates
Unlike revolving credit, an installment loan offers fixed payments over a predetermined period. Common examples include auto loans, mortgages and personal loans. By setting a reasonable monthly fee, you can reduce your risk of getting caught in a vicious cycle of debt that is challenging to get out of. Many lenders like MaxLend installment loans can give installment loans with interest rates far lower than those offered by high-interest short-term loans and are willing to engage with consumers with various credit ratings. By shopping around and choosing the lender best suited to your specific financial situation, you can save even more money on your repayments.
Additionally, many lenders allow you to pay off your loan early without incurring a penalty fee. Paying off your loan early can save on interest charges. However, it’s important to understand each lender’s terms and conditions before making this decision.
Convenience
Installment loans are closed-ended forms of debt that borrowers pay off in equal payments with interest over a set period. While installment loan interest rates may rival credit card rates, they are generally much lower for the amount borrowed. This makes them a more frugal borrowing option, and they can help to manage finances when used for the right reasons.
Flexibility
Installment loans are a more flexible financing option than personal or payday loans. While most lenders will still have some requirements (such as income verification, paystubs and bank statements), they are generally less strict about what kinds of jobs and sources of income will qualify for the loan. Borrowers can get a lump sum upfront to finance their expenses and then pay it back in fixed amounts, called installments, over a set period. This is similar to mortgages, auto loans and student loans. Depending on the type of credit, there may be various payment options, including monthly and bi-annual payments. Unlike revolving credit (like credit cards), an installment loan has a consistent monthly payment that can be easily included in most budgets. This makes it easier to manage cash flow in an emergency. Plus, it’s a safer alternative to payday loans.
