There are many different financing options out there if you are in need of money. As such, it can be difficult to know exactly which financing option is best for you. One of the most common options is an installment loan, which is a loan that is paid back in a series of payments over time. Because of the way they are paid back, installment loans are easier to pay back than some other loan options.
Chances are when you think of a “loan” you are almost certainly thinking of an installment loan. Installment loans are the most common type of loan. At some point in your life, you have either received an installment loan or likely will at some point in the future. A monthly installment loan can be anything from a car loan to a mortgage for your house to a typical personal loan. Installment loans are all around us. You probably have an understanding of how loans work, so you already know something about installment loans! However, there is plenty of important information about installment loans that you might not know yet, so let’s dive into it.
Installment loans are loans that are paid back in “installments,” or a series of payments over time. All installment loans have a schedule for when these installments are paid, but they may vary in length between payments. For example, an installment loan for a mortgage will likely last somewhere around 15-30 years and the lender will have you make payments on that loan once a month. Smaller loans like personal loans might last a few months and installment payments might be made on that loan every week. While they vary in their repayment schedules, all installment loans have a set amount of payments on set dates which can make paying back these loans like clockwork. Similarly, most installment loans have payments that are all equal. With this, you know exactly how much you will be paying at what date so there are no surprises. This can make paying back these loans more routine as well and allows you to plan your weekly, monthly, or quarterly finances around making these loan payments.
Installment loans are either secured loans or unsecured loans. This can determine the risk of your installment loan, so it is an important concept to understand. Secured installment loans are loans that require you to put up collateral for your loan. This is a way for the direct lender to guarantee that even if you are not able to make the payments on your loan, they will have some sort of value they can recoup. For example, if you are getting a mortgage, your loan will likely be a secured loan and the lender will have you put up the house you are buying as collateral. If you fail to pay back the loan, your lender can legally take your house from you. On the other hand, an unsecured installment loan is a loan that does not require you to put up collateral for your loan. Smaller installment loans will tend to be unsecured more often than larger loans. If you have bad credit, your lender is more likely to require your installment loan to be a secured loan since having a bad credit score makes you a risky investment in the eyes of lenders. Overall, secured loans are less risky for the lender and riskier for the borrower, while unsecured loans are riskier for the lender and less risky for the borrower.
It is important to note that some installment loans will require you to put a down payment down before you can actually get the loan. For bigger loans like car loans and mortgages, you can pretty well guarantee your lender will require you to put a down payment down before you can get the loan. Smaller loans like small personal loans will likely not require you to put up a down payment. Keep this in mind before you apply for an installment loan!
Still a little confused about what an installment loan is? Let’s look at an example of an installment loan. Let’s say you want to buy that new car you have been wanting to buy for years but you can’t afford to pay the full price for it. Let’s say the car costs $12,000, so you get an installment loan from ABC lender for $10,000 and ABC lender makes you put up a down payment of $2,000 for the car. You and the loan provider agree that the installment loan will be paid back every month over the course of 5 years with a set interest rate. Every month for 5 years, you will make a payment of $166.66 plus interest until the loan is completely paid off. After 5 years of monthly payments, your loan is paid off!
As more and more of our lives are done on the internet, so too have financial services begun to be offered online. As time goes on, more and more financial services are done online and with this, financial services such as loans and banking have become increasingly regulated and safe online. 20 years ago, you may have been much more skeptical about getting an installment loan from an online lender. Today, online loans like installment loans are not only a reality but they are beginning to outweigh getting loans from brick and mortar lenders.
Online installment loans can be offered from a variety of lenders directly to your checking account. For example, some lenders are purely an online lender or online financial institution that do not even have a brick and mortar store if you wanted to go to one. Other lenders like Goldman Sachs are old, established banks that offer the option to get loans online.
With online installment loans, you give your information to the direct lender on whatever form they provide you. The lender then usually runs a credit check on you. Depending on your credit score and credit history as a whole, you will either get your loan application approved or denied. If you are approved, the lender will then likely deposit your cash right into your bank account.
Being able to get the cash advance loan you need from the comfort of your home is an amazing aspect of online installment loans. Likewise, having the ability to choose from a wide variety of online lenders is an awesome capability that you may not otherwise have if you don’t live in a big city. Wherever you are, you can get the cash you need.
Many of these installment loans, like Possible’s installment loans, are instant approval loans, which means you can apply, get approved, and get your cash advance all within a short period of time. This is another feature of online installment loans that you might struggle to find with a brick and mortar lender.
One of the most commonly repeated pieces of advice for your financial health is to not take on debt unless you really need to. Debt can be very hard to pay off and it can also be costly. If you run into a situation where you cannot pay back your loan or your credit card because it is too expensive or you just flat out ran out of money, you could find yourself in a world of hurt when it comes to your credit score and overall financial wellbeing.
While there is some truth that you should not take on any unnecessary debt if you are the typical American you know that debt can be a tool to help you have access to money you otherwise would not have, as well as getting you out of financial jams when you are short on cash. Debt in the form of loans or a credit card can really help you out when you have nowhere else to turn.
If you are in the process of looking to buy a car or buy an apartment or other living space, an installment loan can be a great tool to help you do this. Since you likely don’t have tens of thousands of dollars lying around to flat out buy a car or home, a personal installment loan can help you have access to the car, home, or other big purchase and allow you to pay it back over time. Unless you are set on saving up for years and years to buy your car or home, you should consider getting an installment loan to help make your purchase.
Another situation where you should consider getting easy approval installment loans is if an unexpected expense or emergency payment arises that costs more than the money you currently have on in your bank account. In order to afford one of these payments, you may need to get an online installment loan with instant approval. While payday loans may also get you the money you need very quickly, you will be expected to pay it right back within a week or two and with a huge APR. Even if your installment loan has a high APR, splitting the cost over a few periods will really help you pay off the loan agreement and get back on your feet.
Installment loans and payday loans are two different types of financing that get you the cash you need but greatly vary in other important aspects.
We already covered installment loans, so let’s briefly over payday loans. Payday loans are just what they sound like; they are loans that require you to pay back the loan on your next payday. They are often repaid in one, lump sum that includes the original loan amount as well as the interest that is incurred. Payday loans are widely available to people with bad credit or even no credit. As such, they often come with extremely high APRs and can be relatively costly. Payday loans are part of an industry that is known to have predatory lending practices that harm borrowers more than the loans help them. This has caused payday loans to have huge regulations put on them and even be outright banned in some states like New York.
While installment loans come in lengths of anywhere between a few weeks to 30 years, payday loans are often no longer than a week or so. Likewise, payday loans tend to be no more than $500 and are often smaller than that.
Because of the very quick repayment term schedule, payday loans can be seriously hard to pay back. While they do give you the cash loan you may desperately need, the payday lenders will require you to quickly turn around and have enough cash to pay the loan off. It’s no wonder that so many people struggle to pay off their payday loans and often take out even more loans to help them pay off their payday loans, which puts them in a vicious cycle called a payday loan trap.
Overall, installment loans are much easier to pay back than installment loans. Even if one installment loan is more expensive than a payday loan, splitting your payments up over the course of a few weeks is much more manageable than having to pay your loan back in a week or so. If you have the choice between an installment loan or a payday loan, consider getting an installment loan so you can avoid possibly falling into a debt cycle with a payday loan.
Here at Possible, we feel that we have created a product that is perfect for helping you get the cash you need while not burdening you like many similar loans do. At Possible, we offer instant online installment loans of up to $500.
When applying for our loan, we don’t check your credit. Bad credit or not, you can still have access to our loan. If your loan application is approved, you could have the cash you need sent to you within minutes.
When paying back our loan, you make one payment a week for four weeks. If you are struggling to pay off our loan, you can extend your payment date right within the app up to 29 days! The best part? You can get our loan right on your phone in the Possible app. You can quickly get the cash you need right from the comfort of your home.
At Possible, we realize there is an injustice occurring in the loan system. Payday loan lenders are price gouging their customers, making their loans hard to pay back, and are not even building their credit if they can manage to pay back their loan.
This is why we created an installment loan that is a credit builder loan. When you pay back our loan, we report your payments to Experian and TransUnion.
Over time, successfully paying back our loans will help you build credit and boost your credit score. Our loans are both easy to pay back and build you credit. We want to see you succeed and graduate out of debt, not get pushed into taking even more debt out!
Convinced? Want to try an instant online installment loan with Possible? Download our app and get started today.