The Different Types of Installment Loans

Have you ever applied for a loan? Chances are you heard the term “installment loan.” While it may not seem recognizable, this term is used often by companies that deal with loans directly — such as credit unions and banks — or indirectly through businesses like insurance agencies.

Many of these companies offer installment loans with meagre rates on a flexible schedule. If you know how to shop around, fast and easy installment loans can be a good deal.

An installment loan lets you borrow an amount of money. The significant difference between any revolving credit, such as a credit card, and an installment loan is that you must decide precisely how much money you need before borrowing the funds.

The term “installment” means paying back the loan in equal payments (payments “install” themselves as comparable units), as opposed to paying it off whenever you can afford it. Let’s take a look at the different types of installment loans.

Auto Loan

An auto loan is a kind of financing that allows you to spread out the costs of purchasing a vehicle over some time. Every lender has its payment structure and interest rate, so you’ll have to look around before you can get the best deal. The main reason to finance through an auto loan is that it’s easier to make lower payments and buy more cars than if you used cash.

Mortgage

Mortgages are for purchasing both existing and new homes. A mortgage can take many forms, including but not limited to the following:

• Fixed or adjustable interest rate
• 15-to-30-year repayment period
• 30-year or 15-year tax deduction

Personal Loan

Do you need to consolidate debt or pay off sudden expenses? A personal loan can help you. Personal loans offer a quick and easy way to get the money you need to handle unexpected expenses or make home improvements. Personal loans work as a kind of installment loan which you can utilize for various purposes, like consolidating debt or paying for expenses.

Personal loans typically have payment terms between 12 and 96 months. These installment loans can offer more freedom than a credit card at an interest rate lower than credit card debt.

Student Loans

The point of a student loan is to assist you in financing your education. You can use this financial aid to help with college expenses such as tuition, housing, and books.

There are two types of student loans. Federal student loans and private loans. The government funds federal student loans. There’s little change in terms and conditions when compared to previous years. If a borrower doesn’t make payments on their federal student loan, it is unlikely that their credit score will become negatively impacted.

There are several benefits to installment loans. For example, one of the most important is that you pay back your loan in small installments over a certain number of months. There’s no interest on fees, and you can have a fixed monthly payment amount you can afford. This can be highly beneficial because you’ll know in advance your payment and how long it will take to pay off the total loan amount.