Every year, roughly 10 million Americans borrow money using installment loans.
They spend over $10 billion on fees and interest associated with these loans, which can range from just a couple hundred dollars to several thousand.
Are you interested in taking out an installment loan? If so, it’s important to educate yourself on the different types of installment loans available to you, as well as the pros and cons of these loans.
Read on to learn everything you need to know about installment loans, who should use them, and how to qualify for them.
What are Installment Loans?
An installment loan is a type of personal loan that you pay back over time in regular intervals (or installments).
The majority of loans for which people apply are installment loans, which they take out from banks and credit unions (both brick-and-mortar and online).
Many people confuse installment loans with payday loans online. In reality, though, they’re quite different.
Payday loans are meant to be repaid in one lump sum. Payday loans are also for significantly smaller amounts of money — usually just a few hundred dollars.
Payday loans have much higher fees and interest rates associated with them compared to installment loans.
Types of Installment Loans
There are several different types of installment loans from which you can choose, including the following:
If you are looking to buy a house, you will most likely need a mortgage. A mortgage is a type of installment loan. In fact, it’s the most popular type of long-term installment loan.
Mortgages are usually worth several hundred thousand dollars (the average price of a home in the U.S. is $218,000, after all). They are repaid over periods of either 15 or 30 years with interest.
Before you can qualify for a mortgage, you will most likely need to pay a downpayment that ranges from 3-20 percent of the total amount of the loan.
Auto loans are also a type of installment loan. Similar to mortgages, they are paid in installments over the course of several years.
Term lengths for auto loans can range from 24 months to 72-84 months. The longer the term length of the loan, the lower the monthly payment will be. This also increases the amount of interest you will pay, though.
Personal Installment Loans
Personal installment loans are also common. A personal loan no credit check can be used to finance any kind of personal expense, such as a wedding or vacation. It can also be used to consolidate credit card debt or other types of debt.
Personal installment loans come with fixed interest rates, just like auto loans and mortgages.
They may have higher interest rates than a typical credit card (depending on your credit score and borrowing history), but their interest rates and fees are still significantly lower than the rates and fees associated with payday loans.
Student loans are yet another popular type of installment loan. Bad credit student loans provide you with a set amount of money each semester to help you cover the cost of your education.
You do not have to pay back your student loans until after you graduate. If you are ever in between jobs, you also have the option to defer these payments until you can find another job.
Benefits of Installment Loans
There are lots of reasons to consider an installment loan. Some of the greatest benefits include:
Fixed Interest Rates
Perhaps the greatest benefit of an installment loan is the fixed interest rate. You won’t have to worry about your monthly payment changing, and you’ll always know exactly how much you’re expected to pay.
Flexible Term Lengths
Installment loans often have longer term lengths than other types of bad credit loans. This provides you with more time to pay the loan back and lowers the cost of your monthly payments.
You also, in many cases, get to choose the term length of your loan, so you can choose the option that works best for you.
Finally, applications for installment loans are also processed fairly quickly. In most cases, it only takes a couple of days for you to get the money you need after applying for these loans.
Finding the Best Installment Loans
Clearly, there are lots of reasons to consider installment loans, whether you’re interested in a mortgage to buy a house or a student loan to cover your educational needs.
When they’re interested in installment loans, many people start by applying at their local bank or credit union. There’s nothing wrong with this, but there are also lots of loans available online that have better terms and interest rates.
Here are some tips that will help you find the best installment loans, especially if you’re searching online:
- Pay attention to all the details — this includes the amount of money available, the length of the loan, the interest rate, and any other fees
- If you have a poor credit score, look into lenders that specialize in poor credit installment loans
- Avoid lenders who use high-pressure techniques to convince you to use their service
- Avoid lenders that guarantee your approval without running a credit check
- Avoid lenders who try to charge you for an application
Remember, if you have a low credit score, you might want to work on paying down your debt and building that score back up before you apply. This will increase your chances of approval and will help you get a loan with better terms and a lower interest rate.
Apply for a Loan Today
As you can see, there are a lot of reasons to consider applying for different types of installment payday loans no credit check.
Are you interested in an installment loan? If so, be sure to keep this information in mind so you can choose the right type of loan and increase your chances of qualifying for it.
If you’re ready to apply for an installment loan, we can help.
At Bonsai Finance, we make it easy for you to apply for installment loans online. It only takes a few steps, and we’ll get back to you right away to let you know if you qualify! Here are some other articles you might find interesting:
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