Personal Installment Loan: What It Is and How It Works
Installment loans are popular credit products, and you likely have one or two of them. Installment loans are, also known as installment credit, are closed-ended and paid over a predetermined period.
These loans are unique because they may or may not have interest. Payments are paid in installments over four to 16 weeks and usually not longer.
How Does an Installment Loan Work?
Are you looking to get a personal Installment Loans Delaware? Note that personal loans are a type of installment loan, and unlike the other loan types under this category, you don’t have to use them for a specific purchase.
Personal loans can be used for car repairs, bills, and debt consolidation. How does the loan work? When you take a personal installment loan, you get a certain borrowed amount of money all at once. You are then required to pay the amount back through scheduled and fixed monthly payments.
Personal installment loans are fixed, meaning the amount does not change. More so, loans that are set to be paid over a stretched period attract higher interest. The personal installment account is closed permanently once you pay the amount owed fully.
What Are the Advantages of Installment Loans?
Here are some of the benefits of installment loans that will help you point out if they are the best option for you.
- They are fast and feature predictable payments
Compared to other loan types, installment loans take a shorter time to apply, be approved and disbursed to your account; they are therefore a great option if you are in urgent need of funds. More so, they feature scheduled and fixed payments which create a sense of predictability.
Predictable loans make it easy for you to set a financial budget and stick to a plan.
- Great for mitigating financial stress
Whether it is a medical emergency, car repair, debt or an urgent purchase, a personal installment loan will help you take care of it and lift your financial burdens when you need money. Provided you are very intentional about the borrowing and are doing it within your means; you will be free from financial stress.
- Flexibility and an opportunity to build credit
Personal installment loans are flexible as borrowers have the freedom to choose how long they want to pay them back. This flexibility allows you to effectively manage your finances even in the middle of a loan term.
Personal installment loans also allow you to build your credit as you stick to and honour your payment schedule.
One of the drawbacks of installment loans is a potentially high interest rate. Make a comparison of different lenders to get a favourable rate.
It is essential to maintain a good credit score as it allows you to secure alone and enjoy a reasonable interest rate. As you plan to get an installment loan, ensure that you fully understand the repayment terms. You will be better positioned to know if the terms will work for you with the information.