An installment loan is defined as a loan wherein a set number of scheduled payments is made in a specific given period of time. For instance, Jane wants to borrow money worth $1,000 for an emergency medical expense. Jane can take out an installment loan requiring her to pay the amount back in twenty-four months at a 25% interest rate. In an installment loan, Jane can get a check worth $1,000 and pay regular monthly payment of $53.37 for a period of 24 months. What is the difference between an installment loan from a payday loan? Generally, payday loans are short-term, with higher interest rate, and are usually paid back as a single lump sum payment on the borrower’s next pay period. Installment loans are flexible because the payments can be spread in many months over the term of the loan.
For people who have a poor credit, bad credit, or no credit history, installment loans are the best option to build credit. The reason for this is that installment loans are requiring multiple payments over time, helping create a good history of repayment. A borrower’s payment history is reported to credit reporting companies or agencies, thus helping improve a credit score of borrowers with a good payment history. Having a bad credit can really ruin your finance reputation most especially if you make business transactions, so dealing with an installment loan can help build and establish a good reputation. If you need extra funds that cash advance can not provide, your best option is an installment loan. Installment loans are more flexible than other types of loans because the borrower can decide the amount to be borrowed and the length of time it can be paid back. A borrower can decide on a shorter loan term and make larger payments or vice versa. Installment loans are not yet available in all states, with some states dictating the maximum and minimum loan amounts that can be borrowed in an installment loan.
In an installment loan, there are associated fees and interest charges, and these fees and charges must be written and explained in the lender’s loan agreement, and notifications must be sent to the borrower if late fees apply if ever the borrower is unable to make payments on time. You need to make sure that if you are planning to get an installment loan, the lender should clearly express all fees and charges in a dollar amount as well as an APR or annual percentage rate as required by the U.S. law. Indeed, installment loans can help people with a poor or bad credit history, including those without credit history, so come and talk to us now and we will help you. We wills hed light to the facts and benefits of installment loans.