?There are many types of loans available on the market but how do you know which is the right one for you? One of the most common loan types is an installment loan but what is this and is this the type of loan for you?
What is an installment loan?
An installment loan is a loan that provides the borrower with the loan money upfront as a lump sum and they repay the loan in installments over a fixed period of time called the loan term. Installment loans are one of many names given to this type of loan which may also be known as a term loan, personal loan or short-term loan.
Installment loans can be for a few months to a few years but they are generally repaid in monthly installments. The payments are normally a fixed amount each month which repay both the original loan amount plus the interest as well.
What can you get with an installment loan?
There is a huge range of installment loans that are available from a wide range of providers as it is a very common type of loan. These loan forms include mortgage loans, home improvement loans, student loans, vehicle loans and debt consolidation. It also includes our loans as pawnshop loans are also a type of installment loan.
Is an installment loan the right loan for you?
As with any loan you need to make sure that the loan fits with your circumstances. Installment loans are one of the most common loan types as they are easy for both the lender and borrower to issue and repay. Installment loans are generally available for a small to large amount of money for short to longer periods as they can be built around your requirements.
The borrower can more easily work out whether the loan is affordable as the repayments are known in advance and are fixed for the loan term, so the borrower can budget for them. Some installment loans will also allow you to pay the loan off early and you may save money on some of the interest.
Adversely though you need to be aware that some installment loans have some negatives. Interest levels and fees vary depending on the provider, so you need to shop around to get the best loan deal. If you miss a payment or pay late there may be consequences as it can impact your credit rating. And if you have taken out a secured loan then the item used as security, such as your home, could be at risk if you don’t repay the loan.