The tempting benefits of installment loans are enough to win the hearts of anybody. It is even more evident now that everybody is just struggling to get by. As day-to-day costs continue to rise, the average salary of an American worker is barely enough to allow them to set aside some funds for retirement or long-term goals. As a result, you may easily stretch yourself a bit too thin while trying to meet your daily needs and achieve your financial goals. This explains why many people have resorted to getting alternative credit to help cater to their needs and achieve their long-term goals. While seeking alternative credit, one solid option that comes in handy for everybody is an installment loan.
An installment loan is a type of loan by which a lender grants your application to borrow a specified amount, and you repay over a fixed period. The benefits of installment loans include an advantage for borrowers that want a long term loan. Unlike payday loans and simple loans, installment loan lenders give you the privilege to pay bit by bit over a long period. It could be weekly, monthly, quarterly, or any time scheduled by your lender. The loan you are repaying at that time is called an installment, hence the name installment loans.
What are the Most Common Types of Installment Loans?
Before we dive into the main importance and benefits of installment loans, let us take a look at the most common types.
Installment loans are available in various forms and types, some of which you are already conversant with. As a matter of fact, your mortgage, personal loan, student loans are all types of Installment loans. There are many locations where you can get these types of installment loans in the United States, either online or offline. As we procced, here are the most popular types of installment loans:
As its name implies, an auto loan is a loan you take to get yourself a new ride. Typically, this loan is repaid within 12-96 months, and the payment schedule is usually monthly and yearly. However, not all lenders in the US can tolerate such a time range for an auto loan. You should note that, when you take up a car loan, you pay more interest whenever you choose to seek for payment extension.
Personal Loans are the loans you take up to solve urgent financial needs like medical bills, house rent, and others. A personal loan isn’t a secured loan because you won’t have to put in your valuable asset as collateral, just like the payday installment loans. This justifies the reason they have a much higher interest rate than the others. The range of repayment term lenders will give you varies from 12-96 months, and it varies on how enormous the debt is.
The loan you take for you to be able to attend and afford college is no other than student loans. You either apply for a federal or private loan option when you want to acquire a student loan.
The federal loan comes with lots of requirements and processes. You will have to produce valid documents and information, such as tax returns, Social Security Numbers, and drivers license numbers, to mention a few. When you have all these readily available, you can go online to complete the Free Application for Federal Student Aid (FAFSA), after which your application will go through further verification.
If the government doesn’t grant you a loan, your next readily available option will be to take up a private student loan. However, you should be cautious of the amount you take because the private loan interest is higher compared to the federal credit.
A mortgage is a loan you take when you want to buy yourself a house. Usually, the duration or term for repaying the lease is between 15-30 years. Through the agreed period of the repayment term, the interest rate on the mortgage won’t change from the price it is from the outset, and the scheduled time for paying remains monthly.
What are the Benefits of Installment Loans?
The huge benefits of installment loans are literally what is driving many people to opt for them. Not only do they make it easy for you to pay back, but they also give you the financial backing needed to achieve your goals.
Fixed Repayment Term
A fixed repayment term is the most notable benefit of an installment loan. Since you already know when you are going to pay back your loans, you can create a workable plan around your payment schedule and follow it strictly.
Your interest remains the same until you are able to clear up your loan. For instance, if you take a fixed mortgage loan, the installment will remain unchanged until you balance your loan payment, be it 20 or 30 years. Also, you will have no problem creating a budget for your mortgage every month since there is a fixed interest that is not changeable.
Access to High Loans
Since the repayment term is long term, lenders are willing to help you out with lots of funds to solve your financial needs. You won’t have many reasons to take up multiple loans since the installment loan is quite enough for you.
Less Stringent Requirements
When it comes to taking up an installment loan in America, the prerequisites are less strict, and they are easy to meet.
Requirements for an Installment Loan
Before you can be eligible for an installment loan, you must have some necessary qualifications and meet some criteria. Without these, your loan application may be rejected, and you may miss out on a valuable opportunity to make smart investments. These requirements include:
- You must be 18 years, which is the legal age in the US.
- Also, you should be a legal resident of the USA; this may require providing proof like your house address for validation purpose.
- Additionally, you must be a permanent resident of the United States to be eligible.
- If you are applying online, it is important to provide a valid social security number (SSN).
- You need a valid government-issued identification card and a proof of bank checking account if you are applying for a loan directly from lenders.
- Although lenders can grant you loans with poor credit history, you will have to tender a valid proof of a steady income that is up to $1,000 per month.
- Undoubtedly, your lender will want to reach out to you, and this necessitates giving out your contact number and email address.
How to Apply for an Installment Loan
- You should visit the site of your chosen installment loan lender to make inquiries.
- Read and understand the requirements they set for borrowers before granting their loan requests.
- If you are ok with their terms and conditions, proceed to fill the application form.
- As soon as your lender approves your loan, you should be credited within 24 hours.