You are driving home from work when your car abruptly breaks down. The mechanic’s estimate? $1,000 for repairs. Or maybe you want to move because you just got a new job in another town, but you don’t have the hundreds of dollars to relocate.
If there is one thing we can all expect from life, it is the unexpected. And when you need help paying for the unexpected, you need an installment loan.
What Are Installment Loans?
An installment loan is unsecured personal loan where the borrower must pay back the principal and interest in equal installments each month. The amounts may range from several hundred up to several thousand dollars. It must be paid off in anywhere from two months to two years, depending on the amount and term. The benefit of installment loans is that they are easy to qualify for, and can give customers fast access to cash when it is needed most. The downside is that they carry a high APR.
APR and Fees example
Say a consumer’s car breaks down and he needs to borrow $1,500 to cover the costs. He takes out an installment loan in that amount. He now has one year to pay it back in monthly installments which he can manage.
The APR for installment loans can be as low as 15% or as high as 450%. Borrowers with subprime credit will have a higher APR.
The borrower also may pay a documentation fee (which might be around $20), and an origination fee (which might be around $50). Other common types of fees include late payment fees and non-payment fees if a borrower does not pay on time. Conversely, a consumer who attempts to pay off a loan early may be subject to a pre-payment fee. If a payment is attempted and fails because of insufficient funds, an insufficient funds fee is assessed.
If in the preceding example the interest rate is 125%, the customer will owe $1,500 + $1,285.76 + $50. Over one year that comes out to $232.15 per month. Just remember to tack on the fees to get the total cost. Missing payments could increase the cost substantially.
How Can I Use Installment Loans?
Installment loans should be used for one-time expenses, like:
- – Car repairs;
- – Urgent medical costs;
- – Moving costs;
- – Pay off a bill before it goes to collections;
- – Cover a gap in case of a late paycheck;
- – Emergency home repair;
- – Cost needed to start up a business.
They should not be used to try and keep up with monthly rent or other ongoing costs. These are expensive loans, and if they are renewed time and again, they will drain consumer’s finances. Used appropriately, however, they can bail borrowers out of a tight spot and help them get back on track.
Installment Loan, Payday Loan or Personal Loan?
If a customer needs to borrow a smaller sum and can get it paid back within 30 days or less, a payday loan is a better option. If on the other hand a few thousand dollars are needed along with a longer loan term, a personal loan is a more suitable option.
Pros of Installment Loans:
- – Enjoy a fast and easy application process;
- – Get approved quickly, even with low credit or no credit;
- – The monthly repayment amounts are predictable;
- – In some cases, the cost of borrowing could be lower than it would be with a line of credit;
Borrow only as much as needed (personal loans are intended for higher amounts).
Cons of Installment Loans:
- – APR can be very high;
- – Fees can add up as well;
- – Some companies tack on insurance and do not report the added cost in the APR.
Installment Loan FAQ
Q: How are installment loans different from payday loans?
A: While both are short-term loans for emergencies, installment loans allow a customer to borrow larger sums and take significantly longer to pay them back.
Q: How will an installment loan affect my credit?
A: That depends. Borrowers who make timely payments may see a boost in credit score. Those who fall behind or take out too many installment loans at once may see their credit score may dip.
Q: How much can I borrow?
A: Usually it is possible to borrow up to several thousand dollars. The exact amount depends on income, credit score, history and location.
What to Know Before Shopping
Not all installment loan offers are equal. Always check the interest rates, APR, fees, penalties, and terms of different offers. Customers should stay away from “no credit check” loans unless that is all they qualify for, as they are more costly.
How Installment Loans Work
Applying for installment loans is easy. Complete a form online, call, or apply in person at a local store. Once the loan is approved, notification will be sent out. Personalize it as needed, verify and e-sign the documentation, pick up the cash (available in as little as one business day), and repay the loan according to the schedule.
Why Apply Through Our Website for Online Installment Loans?
- – We offer loans as low as $500 or as high as $5,000;
- – Bad credit or no credit is fine;
- – Apply within minutes on your desktop, laptop or mobile device;
- – Funds are direct deposited;
- – Same day funding available;
- – We only use responsible lenders;
To apply, simply fill out our easy online form with the amount needed and your email and click Apply Now!. Funds are disbursed very fast! For a fee, same-day lending is available. To avoid penalties or late fees, set up automatic electronic transfers to pay back the principal and interest each month. Contact your customer support for help!