Personal installment loans are helpful financial tools that allow you to borrow money to pay for a large purchase or personal need. Most folks use such loans to alleviate their financial burden.
When you make on-time payments and pay off the loan as agreed, it can also help your credit. However, before taking on a loan, it’s crucial to educate yourself on how it works and how it can affect you as a consumer.
What Is a Personal Installment Loan?
Personal installment loans are credit you take out and repay in fixed monthly payments over months or years. Online lenders, credit unions, and banks all offer personal loans. You can use the borrowed funds for whatever you want:
- Emergency expenses
- Debt consolidation
- Major life changes
- Large purchases
Often, personal loans are unsecured, meaning they don’t require collateral. This means lenders can’t take assets if borrowers default on the loan. To determine if you qualify for a loan, most lenders look at factors such as your income, payment history, and credit score.
The scheduled loan payment amount generally depends on the loan’s total amount, term, and interest rate. Payments are typically due monthly and stay the same for the duration of the loan term.
It’s important to distinguish installment loans from payday loans because the latter have a much shorter repayment term with higher interest rates. Although a payday loan offers easy access to money when an emergency hits, you could end up in a cycle of debt if you can’t comply with the strict payment schedule.
How Long Does an Installment Loan Stay on Your Credit?
Personal installment loans can stay on credit reports for many years after they close. This would be good news if your debt account was in good standing when you paid it in full—meaning, you managed it well and made on-time payments. Such accounts help build a positive credit history and stay on credit reports for up to 10 years.
On the other hand, delinquent or charged-off debts can stay on credit reports for seven years after they were first reported delinquent. These are accounts that borrowers were late on or went to collections. That being said, the effects of late or missed payments fade with time, even before the account is removed from credit reports.
Why You Should Consider Getting a Personal Installment Loan
Staying on top of your monthly payments is an excellent way to improve your credit score. By using personal loans responsibly, you can develop a track record of responsible debt management. Keep in mind that payment history influences your credit score significantly.
For many, getting a personal installment loan is also the best way to pay off debt. When you consolidate your debts into your personal loan, you combine multiple bills into a single payment. In addition to simplifying the repayment process, you may also be able to save on interest.
Tips and Strategies When Getting Personal Installment Loans
Before applying for a personal loan, take note of the following:
- Take a loan only for necessary, short-term financial needs.
- Check the terms and conditions of the loan.
- Look for good deals on interest rates.
- Pay attention to additional charges.
- Search for flexible repayment options.
- Make sure you’re ready to commit to timely repayments.
As with any loan, it’s essential to do thorough research before entering into an agreement. Ensure that the loan you select is one that truly matches your financial needs.
Simple Ways to Avoid More Debt
A personal loan is not meant to be a long-term financial solution. If you keep getting into debt, you put your financial security at risk and prevent yourself from using money on more beneficial things. Here’s how you can avoid potential debt.
- Create a monthly budget.
- Stay within spending limits.
- Cut unnecessary spending.
- Use cash whenever possible.
- Keep track of credit card payments.
- Limit your number of credit cards.
- Avoid offers that merely postpone debt.
- Make on-time loan payments.
- Build an emergency fund.
Contact Lift Credit Today for Quick and Easy Personal Installment Loans
Can a personal loan give you some breathing room with your finances and help you pursue your goals? Apply for a loan today and see for yourself why Lift Credit has the best loans around.