Sometimes, expenses come up out of nowhere, and not everyone has the luxury of having an emergency account to pull funds out of. People who need quick access to cash have a few options. Arguably the best of them is to take out a personal installment loan.
How an Installment Loan Works
When borrowers take out Installment Loans, they get access to the money immediately. Some types of loans, such as mortgages, car loans, and other specialized financial products, must be spent on particular things. This type of installment loan is often secured.
With personal loans, there’s typically no need to disclose to the lender how the money will be used, and no collateral is required. The borrower simply gets the money deposited into their account, uses it for whatever they want, then pays back the full loan amount plus interest in regularly scheduled payments called installments.
In most cases, installment loan payments are consistent across a set number of weeks, months, or years. Unlike a revolving credit account, the loan account will be closed permanently as soon as the balance is paid off.
The Pros of Taking Out an Installment Loan
Taking out an installment loan may be more affordable than opening up a revolving line of credit. These loans are also more accessible than some, which means more people can use them to deal with financial emergencies, make essential purchases, or fund their life dreams. The pros of taking out an installment loan instead of another type of financial product can include:
- The ability to cover large expenses.
- Predictable, regular payments.
- Chances to refinance.
- Lower interest rates than most credit cards.
The Cons of Taking Out an Installment Loan
An installment loan isn’t always the best solution. Because these loans aren’t open-ended, borrowers won’t be able to finance additional purchases, and they may have to commit to long repayment terms. Plus, some lenders charge penalties for paying off loans early. Personal loans also come with interest most of the time.
Common Reasons to Take Out an Installment Loan
There’s no wrong reason to take out a personal loan. Some people use them to finance large purchases, including things like trips for business or pleasure. Others use personal loans to consolidate credit card debt and get better interest rates, to pay for school supplies, or to deal with an emergency. Unless borrowers are working with a specialized mortgage, auto, or student loan lender, they won’t have to worry about justifying their decisions to take out loans to anyone but themselves.
How to Apply
Some people apply for personal loans through their banks or credit unions. However, that’s not the easiest or most accessible way to get an installment loan. Banks and credit unions tend to have very stringent eligibility criteria. Online lenders offer a wider range of financial products designed for people who may not have perfect credit. To apply for an installment loan, simply find a reputable online lender, fill out an application, and submit it to get an almost instant response. If eligible, the borrower will get access to the funds very quickly, often on the same day.