Did you know that taking a loan can improve your credit score? You might’ve considered standard and personal installment loans in the past. But, didn’t apply because you didn’t know which one is the best call.
If you apply for the least favorable option, you may get your application denied or end up stuck with less than affordable payment. The first step to making an informed decision is by learning how these loans work. Don’t know where to start?
We’ve got you covered. We’ll tell you the differences between a regular loan and a personal installment loan. Read on for your personal lending guide.
Standard Loan vs Personal Installment Loan: Which One Is Your Best Option?
Taking a personal loan is a great way to consolidate your debt, avoid high-interest debt and even renovate your home. Yet, which type of loan is your best option? To find out, you must learn the basics about regular and installment loans.
Standard loans include all types of consumer lending. When you apply for a personal loan, car loan or mortgage, you’re applying for a regular loan. Yet, some of these loans are secured or unsecured.
Mortgages and car loans are some examples of secured loans. Your property and car are the collateral on your loan. If you don’t pay your loan, the lender is free to sell your property and apply the proceeds to your outstanding debt.
The main differences between these standard and installment loans come down to the finance charges, fees, repayment, and other terms. Personal installment loans are a type of standard personal loan.
These unsecured loans are set for repayment during a certain term. In contrast with a payday loan, your repayment term may last several months.
If you apply for an installment loan, you may be eligible for a higher loan amount. Also, most of these loans charge lower finance charges and interest rates than payday loans. It will come down to your lender and their requirements.
Before applying, it’s recommended that you contact your potential lenders to learn more about their requirements. You might worry about these loans requiring credit checks. Yet, most lenders will base your installment loan approval on your income instead of your credit.
The Bottom Line
The basic differences between regular and installment loans come down to the repayment, fees, and terms. The first step to choose the right financing for your needs is figuring out your loan purpose. How much money do you need?
If you want to cover an emergency and repay your loan for several months, a personal installment loan may be your best option. These loans may provide a more affordable monthly payment than a payday loan. Keep in mind that your loan terms may vary on a lender basis.
Before applying for your loan, it’s recommended that you contact potential lenders to learn more about their requirements and terms. While your lender may check your credit, most financial institutions will base your approval on your income.
Now that you know the main differences between standard and personal installment loans. Want to learn what lenders offer the best loans? Check out our list to find the best personal loan and apply today.