Need money now and considering the pros/cons between an installment loan vs payday loan? We'll discuss the benefits of both but first, we need to learn how you're in this situation.
Do you think you are making enough money? Or are you in the 38% of the population who live paycheck to paycheck? If you fall in that 38%, then you can relate to what I'll discuss in this article.
Making smart financial moves when you do have it may sound great. However, when money crunches there are two ways you can go, either you have a financial problem or an opportunity to take control of your financial life.
Let us tell you we are not speaking about any lavish mansions, sports cars or some luxury spending, it’s about day to day bare minimums like paying bills or striving for a better quality of life for yourself and those who matter to you.
Why Are You Having Financial Struggles?
The reasons for financial struggles can be multiple things such as underemployment, bad credit score, living paycheck to paycheck, etc. Irrespectively of the reasons, there are diverse ways to rebuild your credit, increase your savings, and break free from the circle of living paycheck to paycheck.
Now one might think most strategies to improve personal finances take time (unless it's winning the lotto). Although it may appear like there’s no getting around, budgeting and building a habit of making better financial decisions which can drastically improve your chances of living the life you desire.
One way is by consolidating the debts using personal installment loans to protect you from any further financial damages due to predatory loans.
What is an Installment Loan?
Before discussing the difference let us disclose a fact to you. Anybody can protect themselves and stay financially safe by avoiding predatory loans, even those with poor credit score! Any loan that’s difficult to be repaid or gets the borrower into never-ending rollover cycles can be unsafe. When facing a shortage of cash, it's natural to believe that short termed loans or fast cash like title loans can resolve unexpected expenditures.
However, the staggering fact is, if not chosen carefully such loans can cost you your asset or result in debt traps. Some safe options like traditional low-interest bank loans, credit unions, line of credits can rely on unused credit in order to let you fix that car windshield or pay the electricity bill.
Now you might think what if my credit card is already maxed out or my credit score is not that good? A personal installment loan from a reputable and socially responsible lender is a responsible solution in this case. Here is how an installment loan is different from all those predatory loans out there.
1. Affordable and Easier to Manage
The biggest difference in terms of installment loans is that they can actually be repaid. Many borrowers cannot afford the lump sum repayments which is a common condition in most of the predatory loans.
Installment loans are essentially designed to allow the borrowers to payback in smaller chunks at regular intervals. The repayment amount is usually predefined or fixed. Thus, instead of a single lump sum payback amount, the installment loan is spread out making more affordable and easier to manage.
2. Spread Over Longer Period
As a borrower of an installment loan, you can decide based on your convenience in what timeframe (in some cases up to 36 months) you can repay the latter. Installment loan lenders usually allow their customers to repay over longer durations.
This means your individual payments will be lower making it more convenient to take care of everyday expenses as well as pay back the loan making it a perfect fit for a better life. Also, if you make one time payments for six months and your lender reports your on-time payments to the credit bureaus, there are chances that the credit bureau will boost your credit score by a few points.
3. Amortizing In Nature
By now we all know that payments are scheduled well in advance for installment loans and the cost of the loan is spread over multiple payments making it more affordable. Most of the short-termed loans might come with startling interest rates and also offer rollover option making borrowers vulnerable to paying another round of interest and fees.
On the contrary, every time you make a payment at a stipulated interval for an installment loan, a portion of the principal, as well as the interest, gets taken care of. This means that the amount paid every month is never changed and borrowers get a clear idea of how much they will owe for each payment including the interest amount. Hence at often, occasions installment loans are amortizing in nature.
Online Installment Loans Summary
If you are in need of cash fast, and willing to pursue a safe affordable installment loan that you can actually repay, make sure you choose a responsible lender before you apply for an online installment loan.
Not only they offer no-credit-check loans but also use a soft credit check application process to evaluate borrowers’ creditworthiness. You will thank yourself as you got all your homework done and now set to shop for the right online installment loan!