Handling your finances optimally so that you are never in a financial crunch is a sweet proposition in theory, but in practice, it is often unachievable. There are a lot of ways your financial plans can get messed up, e.g. an accident to your vehicle resulting in huge repair costs, some major illness in the family, sudden unemployment, increased taxes, any one of these variables is sufficient to put you under an immediate financial burden.
For long term financial issues, coming up with a solid financial plan that ensures savings and boosts credit score is invaluable. But for immediate needs, often a loan is the key to solve your financial issues. However, there are a number of advantages and pitfalls in the process of securing a loan. If you do not have already a good credit score, getting certain loans approved can be a drag. Getting a loan from your friends without interests is a good bet but most people do not like to reach out to their kin for money. Predatory loan options are abundant but they can put you into an eternal debt circle. Hence in all fairness, an installment loan could be the best option.
Why an Online Installment Loan?
Sudden financial hardships or a cash crunch can arise at any time. While it may be due to a lack of financial planning, even the most ardent and organized individuals may feel the pinch of a financial crisis from time to time.
For the short term, a loan seems to be the best way forward. But, of the many types of loans that are available in the marker, an installment loan is generally considered the best option due to its easy repayment options and sometimes pretty low-interest rates.
There are a number of advantages in going for an installment loan online when you need money now. Before we discuss the nuances of an installment loan, let’s look at how its online version is better suited for today’s population.
- Private and Secure: A number of people believe in the complete privacy when applying for a loan. What could be more private than applying for a loan from the security of your bedroom via the internet.
- Easy Approval: By their nature, online installment loans are easier to secure as their demand for credit score and documentation is much more flexible. You can expect approval within a couple of days despite a bad credit rating.
- You are in Charge of Repayment Tenure: The number of months needed to repay the amount is decided by you and you can get a tenure of up to 36 months in some cases.
- Considerably Large Amount: Installment loans secured online can net you up to 1,000 USD at one go. That is a considerable amount of money if you need an immediate financial boost.
Now that we have established the benefits of going for an installment loan online, let’s look at what installment loans really are.
What is an Installment Loan?
An installment loan is akin to a payday loan but it differs significantly in terms of ease of the repayment, protecting you from a debt cycle, your property and more. The biggest advantage of an installment loan is that it does not require a lump sum payment. Often people in need of immediate cash go for regular payday loans thinking they will repay the amount in full with next paycheck. But unforeseen circumstances can arise and the payment will not be done. The person then is forced to roll over the loan further at the same time paying a pretty penny for the high interest rates. This is called a debt cycle.
Under certain circumstances, the debt cycle can become so much of a burden that people are never able to repay the principal amount as they are always catching up with the interest. In extreme cases, people have been known to lose their houses, cars and other properties just to get out of the small loan they thought would help them solve an isolated financial anomaly. There is a good reason these types of loans are also called “Predatory Loans”.
Installment loans, on the other hand, allow you to budget and pay the sum back in smaller chunks over a few months. You can decide the tenure upon the lender’s agreement based on your income and savings. With each payment, you take care of not just your interests but also part of the principal amount. The amount for each installment is pre-decided hence there is never a chance of an ugly surprise.
Other Benefits to Installment Loans
Online installment loans bring to you the best of installment loans along with privacy, security, ease of application and getting the amount directly in your account. Furthermore, there are online platforms that let you connect with a number of safe and trustworthy lenders at the same time.
This allows you to compare between interest rates offered by different lenders, compare the tenures available, and identify the plan that best suits your situation and go for it. Without the help of such online platforms, it would be a back-breaking task to approach a number of lenders individually and compare their offers.
There are a number of benefits in securing an installment loan online and many of them have to do with the ease of repayment and flexibility of securing the loan:
1. Easy to repay
One of the advantages of installment loans is the ease of repayment, as the borrower and lender can agree on a certain time period and number of installments of a certain amount. With each installment, some part of the principal is taken care of and the installment amount does not change till the last payment.
2. Private and secure
Online installment loans are usually private and secure. Most people do not want to advertise their weakened financial condition to their near and dear ones. From the comfort of your living room, you can apply for the loan and get approved.
3. Easy comparisons
An easy comparison is possible online. There are a number of service providers on the internet who provide comprehensive comparisons between different lenders, their interest rates and their document requirements for the loan. You can look at this data and work out the best option for you.
4. Poor credit? No problem
Online installment loans can be applied for and obtained despite a poor credit rating. Sometimes lenders go through the credit rating on Equifax, Transunion or Experian. In addition, a number of other factors are considered as well including your current income and the ability to repay. If you have had a good history with the lender, that will also work out to your advantage.
5. Lenders will work with you
Installment loan lenders are usually a little less stringent that payday loan lenders. If you fall into financial hardships and are unable to repay the last few installments, the lender would typically call you, assess the situation and try to work out an alternate payment schedule. Essentially you get credit for having paid a number of installments. Only if you do not repay the loan at all then third party services are involved.
6. Lower interest rates
The higher the amount of the loan, the lower the interest rate. This is a great aspect of installment loans for people who need higher amounts to get out of their financial crunch. Typically, installment loans can provide up to $1,000 at one time. As the write up suggests, installment loans have a lot going for them due to the ease of payment, lower interest rates for higher amounts, privacy, security, flexible repayment schedule, and other factors.
Installment Loans Providers
There are a number of installment loan providers both online and offline. Also, there are some online services that allow you to seamlessly compare between separate installment loans, their rates, document requirements, repayment cycle and so on.
If you decide to apply for an installment loan online, you can also expect complete privacy which is often not the case for offline loan applications. You are saved lots of visits to different providers and the approval process is pretty fast with the money getting credited to your account directly.
An installment loan is similar to a personal payday loan where the borrower is not required to return the amount in a lump sum. Instead, you can discuss with the lender to identify a certain time period within which regular payments of a certain amount will be made (usually monthly).
Each time a payment is made, it takes care of the interest payment for that cycle and also part of the principal. That makes installment loans great for protecting you from a vicious debt cycle that certain predatory loans offer. Predatory lending is usually secured online or offline despite the borrower having a poor credit history. The repayment cycles can run from 3 months to 36 months.
But we must end this article with a word of advice. No matters how secure, easy to repay or exciting a loan offer is, it can never beat taking care of your own finances. Once your immediate need has been fulfilled, we request you to come up with a solid financial plan to boost your cash reserve and credit score.
You never know when the next hour of need will arise but when it does, you will be armed with a solid credit score and a pool of cash to see you through the hardship.
While the availability of installment loans can get you money quickly, we should never forget the importance of a solid financial savings plan. If you are in an immediate need, we urge you to go for an online installment loan to avoid the debt trap and once the hardship is over, focus on savings in a systematic way.