Installment loans are loans that have a set duration – they last an up to a year or two. The characteristic feature of installment loan is that you pay a certain sum of money each month – you cannot repay your loan by one payment. What is more, you need to pay it on time – there are penalties for being late with payments. What else do we need to know about installment loans?
DIFFERENT KINDS OF LOANS
Installment loans might be as simple as borrowing money seems. But you may want to borrow money in order to buy a car (car finance) or an apartment. In this situation, you should look for a special kind of installment loan that will suit your needs. You can also choose between secured and unsecured loans – remember that when you secure your loan (e.x. mortgage) the interest rates will be lower, repayment terms can be much longer than in unsecured loans. A secured loan is recommended for people who need a large amount of money – having an asset is almost necessary.
INSTALLMENTS = REGULARITY
You need to know that applying for an installment loan you agree to pay your lender a certain amount of money each month. If you default, you pay a penalty – that’s why you should avoid this kind of situation. After all, your goal is to save money and keep your credit profile as good as possible.
Before you send your application, plan everything in advance – you can speculate a bit: what if I lose my job? Will I be able to pay off my loan? This may seem funny but it really helps. You need to be 100% sure of your capacity of repaying your loan.
APPROVAL – NOT THAT SIMPLE
With regular installment loans, you should expect a difficult qualification process. It’s not just about your credit history (but it has to be excellent anyway!). It is about your income and outcome, how many children you have, your employment, your possessions and… Literally, your whole financial status matters. For your lender, it is essential to check whether you are able to pay monthly installments or not – security reasons. Your credit score has to be at least satisfactory… But what if it isn’t?
If you were rejected by a lender because of your poor credit history, you can still hope that you will find a trusted “bad credit” loan company. It is important to compare the terms offered by different lenders to get the most beneficial loan – that means low APR and interest rates, a long period of repayment and no hidden fees. If you need this kind of service, prepare yourself for Internet research. It may sound simple, but in reality, it may be a tricky activity.
Installment loans are a great opportunity for people who want to borrow a large amount of money to buy their dream house or a car. To get it, you need to be very responsible and care about your credit profile. Before an application, think about it at least twice.