There are many different types of loans to choose from and an installment loan is just one of them. If you’ve found yourself lost in the never-ending loan options, here’s your ultimate guide to why an installment loan may be right for you.
What is an Installment Loan?
An installment loan is a fixed amount of money that you borrow and then repay in equal increments, at regular intervals for a specified period of time. There are many different types of installment loans:
- Motorcycle Loans
- Auto Loans
- Boat Loans
- Student Loans
- Credit-builder Loans
- Payday Loans
- Personal Loans
Bear in mind that each type of installment loan is a bit different, with unique fees, interest rates and other features. No matter which type you’re in the market for, however, make sure to shop around for the best deal.
Installment Loans & Credit Scores
How an installment loan affects your credit largely depends on whether you pay the bills on time. If you always do, your installment loan will help improve your score. But if you don’t, delinquency and the possible foreclosure or repossession of any property securing the loan will add derogatory marks to your credit report. And that will take a serious toll on your credit standing.
Be sure you read the rates and terms of your loan carefully before taking one out.
Benefits of Installment loans over Credit Cards
Installment loans are much different than credit card debts. In many ways they are even better than credit cards:
- The rate will not change for the duration of the loan
- The balance has to be paid off before another loan can be taken out
- Cash is directly deposited into your account
- Installment loans are easier to qualify for
- The payoff cycle is purposefully limited so that it is paid off in full in a shorter amount of time
- Payments do not change with the balance
Installment Loans vs. Payday loans
Payday loans are for a shorter duration, have a higher interest rate, and are often paid back in a single lump sum payment on the borrower’s next payday. In contrast, an installment loan can last for many months and payments are evenly spread out over the term of the loan.
A Personal Installment Loan provides you access to the money you need without having to borrow against the equity of a home or car. These smaller personal loans can be used for whatever you need, from a car fix to an unexpected medical bill.
How to Get an Installment Loan
Because your credit score is such a crucial part of the loan application process, it is important to keep close tabs on your credit score in the months before you apply for an installment loan. At TLC, we recognize that sometimes bad things happen to people. Unlike a bank, we want to listen and try to help you get the money you need to achieve your goals.
You can begin the application process electronically by clicking on this link, Apply Now and filling out the information asked. You will need to have the following information available to begin your application:
- Your Social Security Number
- Your address and phone number
- Income information
- Banking information
There are no charges for beginning your application on-line, and you are under no obligation to accept the offer presented to you.
The interest rate on your loan will depend on several factors including the type of loan you get, and your credit history. Will the loan interest rate stay the same throughout the life of the loan? Every loan from TLC has a fixed rate, which means your rate will not change for the entire term of your loan.
You are the only person who can determine if an installment loan is in your best interest. At TLC, we want to help you learn more about managing your money, which will also help you reduce your debt and the cost of your future borrowing needs!