subject: Why An Installment Loan Is A Good Choice [print this page] With an installment loan the loan is usually approved upon the condition of having sufficient collateral and good to great credit. Your credit score of course determines how good of an interest rate you can get on the installment loan and whether you are even going to get approved.
With an installment loan the loan is repaid over a set period of time requiring a fixed number of scheduled payments. The period of time over which you make payments for an installment loan can range from as little as a few months for a small line of credit to as long as thirty years or more with a home mortgage.
Installment loans are difficult to qualify for and for those of you that have less than perfect credit the interest rates that are charged over the term of the loan is quite high. Installment loans require a massive amount of paper work.
The typical home loan mortgage has over 20 pages at the time of the application and can easily have over 300 pages when you sign for the loan at the title company.
One of the downfalls of an installment loan is that they typically are not made for small loan amounts. Most often the minimum is about $2,500 and that would normally only be done if you were buying a car.
So what about those of us that are caught between a rock and a hard place that need money today? We don't have the time to fill out lengthy paper work and to wait for an approval.
We just need some money now that can get us through till our next payday. On online payday loan is different from an installment loan in that there is no lengthy applications, no credit check, and no collateral required for the loan.
As a matter of fact if you are over the age of eighteen, have a steady job, a place of residence, and an active bank account you probably already qualify.
Unlike an installment loan a pay day loan is for a very short period of time, usually two weeks or thirty days if you are paid monthly, and for $1,500 or less.
A pay day loan only requires one payment for the full amount of the loan on the predetermined date established when you applied for the loan. As opposed to installment loans, payday loans make perfect sense for those of you who are facing an unexpected bill or family emergency and just need some help to get you to the next pay day.
So if you need cash right away and the amount you need is under $1,500 and you don't want to go through the nightmare of applying for an installment loan then a pay day loan might be the perfect solution to your given emergency.
There are several reasons why an installment loan would be availed. They are an alternative to payday loans because they typically have lower interest rates and a longer repayment cycle.
These loans help you pay your bills without getting stuck in a payday loan cycle due to unforeseen expenses. Installment loans can be used to protect your credit rating by giving you quick funds to avoid missing a payment or making a late payment to a creditor.
When you pay your bills on time, your credit rating will not suffer due to a temporary lack of funds. They can can be used to finance a larger purchase, allowing you to buy an item that would ordinarily be out of your budget.
They allow you to avoid using a credit card to buy something that you cannot pay off immediately, or to pay off a credit-card balance and avoid interest charges.
Installment loans can be a source of down-payment funds for a home or car purchase if full financing is not available. Obtaining a small loan can help build your credit rating.
By paying consistently on time, your installment loan will improve your credit rating, which is a good method to establish credit or rebuild your standing after a negative financial situation.
