Some of the Most Common Types of Installment Loans
An “installment loan” is a broad, general term that pertains to the overwhelming majority of both personal and commercial loans given to borrowers.
Installment loans include any loan that can be repaid in installments. This loan provides a borrower with a fixed amount of money that must be repaid with regularly scheduled payments.
Each payment on an installment debt includes repayment of a fixed amount from the loan of the principal amount borrowed and also the payment of interest on the debt.
So what are the types of installment loans? There are plenty of installment loans. These include laptop installments, personal loan, auto loans, and other installment loans. Their commonality lies in that they can be paid over time in installments.
The types of installments are:
First is the laptop installment. Laptop installments are paid over time. You can get a laptop installment if your old laptop cannot keep up with you anymore and if it cannot repair anymore. Thanks to the offers on the market, you can pay for your laptop over time at a low price.
Mortgages pay for your house. It is secured by the house and can be repaid for ten (10) to thirty (30) years. There are different types of mortgages that are available on the market and suit different budgets and needs.
Auto Loans are tailored to help you buy a car. The car that you buy secures the auto loan. They usually have fixed interest rates and repayment periods that typically range from two to seven years.
Personal loans, unlike other kinds of installment loans, do not require specific purchases. You can use a personal loan for a wide variety of reasons.
With a personal loan, you can consolidate your other loans, thus making it faster and easier for you to pay off all your debt. Most personal loans are unsecured.
Benefits And Cons Of Installments
The benefits of installment loans are:
- It can cover large expenses. Installment loans can cover a wide range of expenses, such as emergencies, your home, and new gadgets. What’s great about them is that you can save money by paying off your purchase little by little over time. Under the Personal Loan type, you have more flexibility as well to put your money where your mouth is.
- Regular payments are predictable. With an installment loan, you know what and when your installment amount is going to be set around. As a result, budgeting becomes easier, and you can plan your financial purchases around your regular payments. You also get to save more as a result.
- You can refinance your finances. If interest rates fall or if your credit score improves, there is a higher chance to refinance.
The cons of installment loans are:
- A potentially lengthy financial commitment. Installment loans are a major financial commitment. It will take a long time, depending on how well you pay.
- Not open-ended. If you need more, you may not add an additional amount to your current loan.
- Possible interest charges. Depending on your loan, interest might not be charged on some installment loans
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