There are loans one take and does not pay in installment. Payday loans, borrowing from loan sharks, etc. are pretty dangerous as they need to be paid at once.
Installment loans, however, stand out as one does not need to pay at once. The payment is spread out over an agreed period of time. As convenient as installment loan stands, people do not usually take the best type. Hence, we will open you up to the pros and cons of installment which will guide you in going for the most beneficial type.
Pros of Installment Loans
Easy to Manage Small Installments
This is the most glaring advantage of installment loans. Borrowers will be able to break down the huge sum into small manageable installments. Hence, paying back will not burn a hole in the borrowers’ pocket.
Borrowers will know the amount they have to pay every month. Hence, they will better manage their finance in preparation to service the payment. Besides, there are no sudden surprises that come with paying back the debt.
Easy to Apply For
Most installment loans do not delay in giving their verdict on approval or disapproval. Compared to a payday loan or mortgage equity line of credit, installment loans do not delay.
This makes it very suitable to service unexpected expenses like a car breakdown, a big financial expense such as a wedding, medical bill, etc. Aside, when compared to a credit loan advance, it offers a lower interest.
Does Not Discriminate
Another advantage of an installment loan is the ability to take them. Irrespective of your financial state, the much financial industry offers good installment loans opportunities that can help service bad credit.
Cons of Installment Loans
As juicy as the advantages of an installment loan are, it also comes with some shortcomings. We discuss them below:
Features of Payday Loan
There are various financial institutions that offer installment loans. Some are notorious for adding inconvenient features of the payday loan like excessive interest or short repayment terms. Vulnerable people are those without a strong credit score or a steady source of income.
Due to the fact that these loans are paid in installments, the longer it takes to pay them off, the more the interest you are likely to pay. As a result, one needs to be careful in considering an installment loan. If you desire to wait before going for an installment loan, endeavor to improve your credit score rating. This will save you in the long run.
Hidden prepayment Consequence
By the nature of installment loans, they can be repaid before the end of the loan term without any consequence. Thus, anyone with the capacity to pay off the debt way before the agreed end period should. It will save on excessive interest.
In this regards, one has to be careful of notorious lenders with prepayment fines in the terms of the loan. All installment loan companies are not created the same way hence, one needs to do a thorough research before committing.
This type of loan could be a way to save you from any type of financial embarrassment. Everything in life has the good and the bad side. However, it is important you weigh the pros and cons before committing to one.