An installment loan refers to a loan wherein a set of number of scheduled payments are made over time. For instance, Jane needs to borrow $1,000 to pay for an emergency medical expense. Jane takes out an installment loan, needing paying the amount back within 24 months period at a 25% interest rate. When it comes to an installment loan given this situation, Jane will need to pay $53.37 for a period of 24 months. What is the difference between a payday loan and an installment 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. On the other hand, an installment loan lasts for many months and payments are spread evenly over the term of the loan.
Installment loans are usually used to help to build credit for those who have a poor credit, bad credit, or no credit history. The reason for this is that installment loans are requiring multiple payments over time, helping create a good history of repayment. Installment loans can help in improving an individual’s credit score most especially if the borrower makes timely payments. Now, Jane can establish a good payment history with the help of installment loans because of multiple payments. An installment loan is a good solution for those needing extra funds that beyond cash advance can offer. 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 long-term loan with smaller payments or vice versa. Today, installment loans are not yet available in all states and there are some states that dictate the minimum and maximum loan amounts that a borrower can obtain an installment loan.
Installment loans involve applicable fees and interest charges, and if the borrower is unable to make on-time payments, then any late fee must be notified to the borrower before application and collection. It is important to be aware the lenders must express all charges and fees in dollar amount including the annual percentage rate (APR). 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.