If you are looking for a loan, you will no doubt come across a wide array of options. But when you have had less than stellar credit and you need money as soon as possible, you won’t qualify for most traditional loans. If you don’t have perfect credit and you require financing the shortest time possible, consider an installment loan.
What Exactly is an Installment Loan?
Any type of loan that’s paid in regular and fixed installment amounts is basically categorized as installment loans. Although these loans are usually associated with low credit, they’re technically personal loans paid off in installments. The repayment terms vary according to the specific type of loan and lender requirements.
In general, the loan term is between six months and 60 months. The most common payment method involves the lender deducting payments directly from your account exactly on the due date of your payments. Some lenders would likewise offer different payment methods such as paying through an app, check, or online.
The total cost of your loan would be dependent on the exact loan type. Once you’re approved for an installment loan, Loans For Less explains that you’ll receive a contract outlining the interest rate and fees. These costs typically include loan origination fees, late payment fees, and prepayment penalty fees, as well as your interest rate. It would also include your APR or annual percentage rate, including all interest and fees expressed as an annual percentage.
Key Things to Keep in Mind
An installment loan is flexible and a great option for borrowers with less than perfect credit. It could be easily customized to your financial requirements, such that you get to choose the amount you want to borrow (depending on lender-specific limits) and the loan term that would allow you pay the loan comfortably.
You could get funds at a significantly reduced interest rate compared to other credit financing like credit cards, and keep more money on hand instead of piling up a huge cash outlay.