How Installment Loans Can Offer Consumers Lower Rates and Longer Repayment Periods
Installment loans are growing popular as consumers seek for loan options that can help them meet their financial needs. Considering the diverse number of lending facilities, it is essential that consumers seek for the right credit facilities to avoid getting deeper into debts. The traditional banking institutions may not cater for consumer especially those struggling with bad credit score. Many people are turned down for loans from these banking institutions something that leaves them stranded on where to get help. Payday loans have become an option for consumers who cannot get assistance from the banks. However, these cash advance loans are very costly when they are borrowed over and over again or if a borrower rolls over the balance a couple of times. Nonetheless, consumers can take advantage of installment loans to get financial help.
One thing that makes these loans popular is that they have a fixed repayment schedule, something that helps borrowers to avoid excessive late fees, reconnection charges, and other penalties. In an installment loan, the borrower is granted a credit facility, which is paid back in predefined installments over a certain period of time or loan term. The number of repayments is normally fixed contrary to revolving credit where the payments change with the balance such as credit card debt. With these installment loans, you can get an amount ranging from a hundred dollars to several thousand dollars. In the repayment of the loan, the principal, interest, and other charges like fees and insurance premiums are repaid in a fixed monthly installment. Since the installment is fixed, it means that you know what you are supposed to remit every month. This puts the consumer is a better position to repay the loan comfortably. With revolving credit, the charges, fees, and other expenses attached to the loan can vary in different times. This affects the amount of installment you have to pay each month.
Installment loans can be repaid over a couple of years depending on the loan agreement unlike payday loans that are paid in the next paycheck. Moreover, installment loans attract lower annual percentage rates-APRs, which typically range from 25 percent to more than 100 percent. Although these rates may be higher, when compared to payday loans, they are small and consumers can manage to clear their debts. In many loan facilities, the effective APR is significantly higher that what is stated in the loan contract. This may arise due to purchase of credit insurance, which lenders are not required to include in the calculations for APRs under the federal Truth in Lending Act.
An installment loan is a medium term credit facility, which grants a higher loan amount than payday loans and at relatively lower interest rates compared to payday loans. Although payday loans can help you fix some emergency financial situations, they may not help you when you have a pressing financial need that requires a larger amount. If late fees, hospital bills, and car repair expenses are so big to be financed by a payday loan, the installment loans could help you get out of that mess. The repayment is designed in such a way that it is less pressing to the consumer.
Helping consumers to better understand how short term loans work, what lenders are presently offering installment loans and how to save money with your finance goals, learn more online at http://www.installmentloansnetwork.com