To borrow money for an emergency, or to help pay an unexpected expense, to replace important equipment, or to cover any need for cash, an installment loan can be a very important resource. Installment Loans are used frequently when people need to pay a large one-time expense or cover the cost of a major emergency. Here’s a quick guide to applying for an installment loan online.
Applying for an installment loan is not a complex process, and you can get the funds you need quickly. Then, you can easily plan your budget to include your periodic loan payments, which are usually bi-weekly or monthly.
It’s empowering to have a better understanding of the loan you choose and the basic advantages and disadvantages of this loan type. Use the information below to help educate yourself on how installment loans work.
What Is an Installment Loan?
An installment Loan is one that you repay over an agreed series of scheduled payments. Common kinds of loans that are repaid on an installment arrangement include auto loans, mortgage loans, other collateralized loans, installment personal loans, student loans, and others. The loans are typically repaid over a set period of weekly, bi-monthly, monthly
Benefits of Installment Loans
Taking an installment loan allows you to borrow a higher loan amount and repay it over a longer period of time than shorter-term loans permit. For example, if you want to buy a car, you may qualify for an installment loan of $10,000, or $20,000, and you may be allowed to pay it back over a number of years. For example, your lender may agree to a repayment term of 2 years, 3 years, 5 years, or even 7 years.
Reasons for Getting Installment Loans
People choose to use installment loans for many different purposes. Keep in mind that you should limit your use of installment loans only to emergency needs or major, unexpected expenses, such as:
- Paying unexpected medical bills
- Paying urgent utility bills
- Making car or home repairs
- Buying a vehicle or a house
- Buying necessary business equipment
- Investing in your education
- Other major expenses
- Improving your credit status
Pros and Cons of Installment Loans
Loan consumers increasingly prefer to use an online loan application. There are various reasons why initiating loan processes online has become so popular.
So, more lenders are enabling their customers to start the installment loan process online and then just finalize their loans at the lender’s nearest loan office location. This option has made getting an installment loan more convenient than ever. Of course, as with anything else, there are advantages and disadvantages of any type of borrowing. Installment loan pros and cons include:
- Fast processing
- Less strict credit requirements
- Simple application process
- Larger loan amounts
- Flexible repayment options
- Can’t increase loan until paid off
- Interest rates can be high (based on credit)
- Some may require collateral in certain circumstances