When you get an installment loan, you are scheduled to pay the loan money back along with the interest to the lender in a specified time duration, fixed amount and fixed number of repayments; to completely get out of the debt.
Installment loan has many benefits for the borrower as the interest rate is not so high as compared to revolving credit financing. Due to this they would be able to have and spend money for purposes other than the loan installment. You may need to make something as a collateral if you are getting a secured loan.
But if you want to get an unsecured one, you don’t need any collateral and neither the purchase for which you got the loan would be taken from you as a collateral if you fail to pay the loan back on time. Unsecured installment loans are granted on the basis of your credit worthiness. But if you are unable to repay the loan on time, the lender could use some other ways to get their money back. They could take away your property to cover the amount, use a collection agency to collect their debt money or take you to court.
So, it is important to know everything about the type of loan you want to get. The type of needs you could get an installment loan for could be your education; meaning student loan. You could get it to buy a car or you could get a mortgage loan or home equity loan.
Sources of Unsecured Loans:
When you are looking for an unsecured loan you could check out different types of lenders so that you have a choice for different interest rates. These sources could be:
This type gives you the ease of filling your loan application while staying at home. Before selecting an online lender, make sure to check for their trustworthiness.
You can always go to a traditional bank for a loan and talk personally to them about your concerns and queries regarding the loan.
These are like online lenders but they are like investors and get their profit by lending you their funds. But you should check their fees before borrowing money because they usually charge more than others.
A credit union is a community-based organization that could also be your preference.
Read more: How to get loan with bad credit?
When paying back the loan, you should consider some things. You should remain conscious of the date of your installment payment. You could set a reminder for it. Also keep this in mind that not to pay the installments before the scheduled time. Because some lenders charge payment penalty, which is the fee charged if you repay your loan before the end of your term. You should not get such loans that charge this penalty. Because if you are able to pay back the loan before term, it would benefit you as you could save your interest charges.
This type of loan is a good option when you have a specific motive to pay for.