What is an Installment Loan and What Can it Be Used For?
Due to the financial crisis that not only United States but the world is going in recent years, lenders has had a boom and loan types have been diversified.
There are many types of loans. Whether for business, pleasure, or for personal installment loan use, knowing what type of them are available is important in making financial decisions. A common type is the installment loan.
It is a common way to get quick financing.
The main advantage of it is that it’s a great way of cash advance for people with bad credit, because you have to pay small amounts of money monthly and you start paying in a long period time from the moment you get your cash.
Many people considers them as personal loans… I do not agree with this concept. It has its own presence and requirements are very different. Besides, installment loans has a whole variety of uses and types themselves.
For instance, a fixed installment loan is paid off with a number of equal periodic payments. You can decide how many payments would you like to do according to the amount you asked. Of course, the more time you need to make the repayment, the more interest you will have to pay.
The Credit card loans are open-end installment loans because they are paid off with variable monthly payments instead of fixed.
Many people think that they are the same as PayDay Loans, well, the main difference is that the installment loan is that loan which is available for repayment over a longer period of time rather than on your next payday as with a payday loan.
The way an installment loan works is fairly simple. The loan is for you, and must be repaid on a certain date. Before that date, payments may be done monthly. On the date of the loan term we will have pay the entire balance of the loan, no matter if we decided to make fixed or variable payments.
Of course, there are short and long term installment loans, but it will depend only on your needs.
The maturity of the loan term is usually three to five years. That makes it a short-term loan. On the other hand, long-term loans have high interest, but are available in the financial market as well.
With multiple definitions available for a loan, it is important to take into account all the different types. Depending on what you need and as long as you need, there may be a series of term loans you want to consider. In addition, full understanding of what is out there in terms of a term loan can help you make a good financial decision.
These loans are available to the borrower on terms in which they are able to pay them back slowly and therefore they can help with a lot of immediate an unexpected bills like hospitals, medical emergencies and car problems or towing.