You may or you may not be familiar with installment loans. These are very similar to other types of debt financings with a greater flexibility of repayment fragmented into schedules as per agreed terms.
The components which are calculated include your loan amount (the principal amount), the interest rate (markup), and the time tenure. These three factors determine as to how much and how often are you going to pay the installments.
At times, you may face the need of having extra cash in your pocket to back your unexpected expenses &/or liabilities up. These encounters are pretty common and due to occur at least once every month for a normal salaried person who operates within predefined timelines, and in an instance, if a calamity takes place, the entire cycle gets disrupted.
In such weary situations, one must be acquainted with a backup plan. And tying yourself into installment loans is that very plan.
1. Who’s The Perfect Fit For Installment Loans?
Anyone who is in severe need of finances and unable to repay the amount in a single go (one-time payment); which is the case with short-term loans. Installment loans are payable over a certain period of time in partial installments.
They may be weekly, bi-weekly or monthly depending upon the agreed terms between you (the borrower) and the lending institution (the installment loan lender).
If you run a fine glimpse over the web or go through the directories listed with your Central Bank, you will find a lot of online lenders who are providing installment loans to prospective borrowers.
2. Installment Loans And Short Term Loans! What’s The Core Difference After All?
Anyone whose documentations are complete is eligible to apply for an installment loan. To its contrast, there’s a financing mode termed ‘short-term loans’.
The latter, however, are short interval loans and come with a very limited entitlement (the amount of financing).
But if you apply for an online installment loan, you may be eligible to get around $1000 or even more; and that too to be payable over an extensive period of time.
3. Who Should Apply For Online Installment Loans?
The amount of loan to be granted to a prospective borrower is fixed and pre-determined before disbursement. The applicant’s monthly income or any other source of income is to be declared at the time of submitting an application for online installment loans. Anyone who is in need of a quick finance, and is unable to repay a definite one-time amount, is recommended to avail this type of friendly financing.
The repayment schedule spread over a convenient timeframe is the best part of installment loans. However, one must bear in mind that due to enhanced repayment time, there’s a bit of higher interest rate if you compare installment loans with short-term loans.
4. Installment Loans Vs Short Term Loans! What For Whom?
Let’s keep it simple… A person who:
- Needs enough time for repayment;
- Is capable of bearing an extra interest rate.
Would opt for installment loans… And a person who:
- Can pay a definite amount (principal + markup) at a specified date and time;
- Doesn’t want to tie into extensive contracts.
Would opt for short-term loans!
5. What’s In It For Bad Credit Holders?
In comparison to short-term loans, online installment loans are associated with an enhanced repayment schedule, which helps in establishing a good credit history for those who don’t have one!