The type of personal loan that can be taken for some necessity or in an emergency situation and then paid back in fixed amounts and according to a schedule; mostly monthly, is an installment loan.
The different types of installment loans include auto loan, mortgage loan, loan for debt consolidation or to pay off any emergency bills.
Benefits of an installment loan:
The process of your credit check can be quick by some lenders so they can easily transfer the loan money into your account; if you are approved for the loan. This would provide you with quick cash in cases of emergency.
Term of repayment:
A great benefit of getting an installment loan is that you don’t have to repay the whole amount of loan in one go but you have plenty of time and would be able to afford the scheduled installment amount. In this way, you could save some money too.
Limit of borrowing:
In installment loans, you are able to get a high amount of cash because the borrowing limit is usually higher for this type of loan.
If you are applying for installment loans online, the filling of application form is a quick and easy process. And the response is usually also fast.
Apply any time:
If you are applying for a loan online, you can apply any time of the day as there is no time restriction like a traditional bank or another lender who has office hours of opening and closing from 9 to 5. So, this is a great choice in any sudden situation.
Consideration of Credit rating:
Many lenders of installment loans don’t consider your credit score as the only factor for your credit rating so it does not matter much if you have a bad credit score. You could also show them your receipts as evidence of billing or your paychecks to determine your credit rating.
The interest rates for installment loans are usually low when you secure the loan with an asset as collateral.
Low monthly payments:
As you don’t have to pay the whole loan amount in one go and the installments are numbered with the total duration of repayment, you have the benefit of paying a small amount in every installment monthly.
An installment loan could either be collateralized or non-collateralized.
If a mortgage loan is collateralized, the collateral is the house that the borrower has bought. Similarly, the car is the collateral in an auto loan.
Noncollateralized installment loan is usually granted on the borrower’s creditworthiness which is determined by their assets, paychecks, and credit score. The interest rate is also high as compared to the collateralized one.
An installment loan is better as compared to a payday loan because of the small and easy to pay installments rather than a large sum of money. If you fulfill the criteria and are selected for an installment loan, go for it instead of the payday loan.