What Is an Installment Loan?
An installment loan is simply a loan the borrower pays off in separate installments. The total amount you borrow is decided when the loan is created, along with the number of installment payments and the dollar amount of each one.
This is in sharp contrast to a revolving credit account, such as a credit card, in which you can decide to borrow various amounts to meet your needs and pay back various amounts above a minimum.
What Are the Advantages of Installment Loans?
The main advantage of an installment loan is the predictability of the installment payments. You’ll know in advance how much you’ll pay every month and be able to plan for it. The amount generally won’t rise and damage your budget.
The preplanned installment schedule also allows you to plan for the exact date when your loan should be paid off. You may be able to pick a smaller number of installments to pay off the loan faster and pay less interest, or a larger number of installments to get a smaller monthly payment.
What Are Examples of Installment Loans?
Installment loans include many of the regular loans you’re familiar with, such as auto loans and mortgages. You may not be as familiar with personal loans, though.
Personal loans can be taken out without being attached to a particular expense or asset, such as a house. They often carry higher interest rates, though, than loans that are secured by collateral—again, such as a house.
A personal loan can be used for a variety of purposes, such as emergencies, medical bills, debt consolidation, vacations, and other expenses. They often have installment terms of between 12 and 96 months.
How Can I Get an Installment Loan with Bad Credit?
If you want an installment loan but have a low credit score, you can apply for a personal loan with us, and we won’t check your credit! Visit LiftCredit.com to see how.