If you need money now to pay for a car repair or to make sure that you don’t lose your spot in school, you may want to turn to an installment loan. Taking out a loan allows you to get the money that you need today without having to deplete your savings or otherwise come up with the cash on your own. What should you know about installment loans before you get one?
Installment Loans Have a Fixed Ending Date
When you take out an auto, student or any other installment loan, it has a fixed number of payments before it is paid off. Therefore, if you take out a 60-month loan, you will make 60 payments of principal and interest. However, it may be possible to pay off the loan early if you want to make larger payments. This may be worthwhile as doing so will reduce the amount of interest that you pay on the loan.
Installment Loans Can Be Refinanced In Most Cases
An installment loan may be eligible to be refinanced if you need or want to do so in the future. For instance, your credit score may improve after making timely payments over the first year of the loan, which may entitle you to a lower interest rate. If you lose your job or suffer a dramatic loss in income, you may be able to extend the term of the loan to lower your monthly payment. However, you will pay more interest by choosing that option.
Both Secured and Unsecured Installment Loans Are Available
Installment loans may either be secured or unsecured. Examples of a secured installment loan include a car or home loan that is secured by the asset you are purchasing with the money. An example of an unsecured installment loan is a personal loan or perhaps a loan that you received from a private source such as a family member or friend. There is no collateral needed to get the money, and unsecured loans are generally reserved for those with good to excellent credit. If you are interested in installment loans, or have questions, consider speaking to professionals like those at Las Vegas Finance.
If you are in a financial crisis, you may not know where you can find the money to pay your bills or other obligations. However, an installment loan from a bank, a credit union or a peer lender may offer the money that you need at reasonable terms. Flexible repayment options may be available to ensure that you can repay your debt without facing another hardship.
For those that are familiar with installment loans, what advice can you offer those seeking this type of loan? Share your tips and thoughts with our readers below.
This article was guest written by Emma Sturgis. Frugal Buzz has not reviewed the companies mentioned in this post nor do we endorse them. Consult with your financial advisor prior to getting any personal loans.