Installment loans serve as the most popular form of consumer debt today. Rising health costs and increasing household expenses lead individuals to find ways to meet their obligations, and these loans allow them to do so easily. In fact, a person might find they end up better off financially if they choose to take out an installment loan. How is this the case?
Installment Loans
installment loans springfield mo serve as a financial product that is paid back over time. Most individuals make payments every month, and this payment includes both the principal of the loan and the interest.
Installment loans come as both secured and unsecured products, and consumers must know unsecured loans typically have a higher interest rate than their secured counterparts. However, this interest rate usually comes in lower than what one pays on a credit card.
Unsecured loans don’t require any collateral, and many people turn to online installment loans no credit check when they need cash fast. Nevertheless, the borrower must make all payments on time to prevent damage to their credit.
In contrast, secured loans come with a guarantee in the form of tangible property. Car loans serve as secured loans. If the borrower doesn’t make the payments as agreed, the lender retains the option of repossessing the vehicle.
What are some benefits associated with installment loans?
Lower Interest Rates
Interest rates on credit cards remain around 15 percent on average. Twenty-four-month personal loans, on the other hand, come with an average interest rate of nine percent, as reported by the Federal Reserve. As a result, men and women who take out a personal loan to pay off credit card debt find they save large amounts of money.
In addition, some lenders now reward borrowers who enroll in autopay by providing them with a lower interest rate. However, the borrower’s credit score plays a role in the interest rate they pay.
Fixed Monthly Payments
Men and women find budgeting becomes a much easier task when they take out a personal loan. While credit card payments remain fairly predictable, the amount of time needed to pay the credit card off could run ten years or more. Most individuals pay off their installment loans in significantly less time.
A Better Credit Score
Borrowers find an installment loan can help or hurt their credit score. When they apply for the loan, the lender conducts a hard credit check. This may lead to the credit score dropping a few points. Any late or missed payments hurt the credit score, and it could be years before the damage is erased. However, individuals who make all payments on time find their credit score increases, as lenders see they know how to use credit the right way.
Emergency Repairs
Things break, and a person might find they don’t have the funds necessary to complete the required repairs. Installment loans become of great help in situations such as these. They allow the individual to take care of the problem right away and pay for the work over time.
If you find yourself in need of fast cash, look no further than an installment loan. These financial products come with many benefits and few drawbacks. Learn more today to see if this option is right for you.
