What Are Installment Loans?
Every now and then, we need a loan to get by. There are many different types of loans out there, so you may feel overwhelmed as you consider which one is right for you. One type of loan is called an installment loan, in which you borrow a set amount of money that must be paid back over a fixed time period. The exact
amount of time is determined with your lender, and payments are expected to be due monthly. It's common for most installment loan borrowers to pay it off in 72 months, or roughly six years.
Learn more about installment loans from the lenders at Rapid Auto Loan.
Examples Of Installment Loans
Installment loans can be used for many different circumstances. The following examples are the most common:
Auto Loans
Buying a car is a huge investment, in which many owners will take out a loan that is paid off anywhere between 12 and 96 months. It is possible to pay off the loan over a longer period, but the interest rate will increase, and you could end up paying more over time. You will actually pay less to pay off your vehicle with, say, a 36-month loan as opposed to an 84-month one.
Mortgages
A home is arguably the most important financial investment most of us will make. Mortgages are a type of loan that help you make payments on the house over a span of 15 to 30 years. These loans typically have fixed interest rates that will not change over time, so you will always pay the same amount each month.
Personal Loans
Personal loans can be used for many purposes, but the most common is consolidated debt that can accumulate rather quickly, such as medical debt. These, too, are typically paid off within a span of 12 to 96 months, but also tend to have some of the highest interest rates. This is because they don't require collateral upfront, as cars and houses do.
Can Installment Loans Affect Existing Credit?
Typically, any credit check will lower your credit score by a few points. But, paying back your installment loan consistently will help you build credit. Having a good payment history makes up roughly a third of your credit score, so it's important to make sure you're in a financially secure position before agreeing to the terms of your loan. Missed or delayed payments will damage credit a lot more than a credit check: you can lose 50 to 100 points if your payment is delayed by 30 days or more. Many lenders will offer automatic payments, so you'll never forget to pay back what you owe.
Getting An Installment Loan
Different lenders will use different methods when they consider your loan application and decide your rate. The pre-qualification process allows you to see how much you are qualified for, and what your payment rate will be, without any negative effect on your credit score. It's important to assess your current budget to make sure that there's enough funds for making loan repayments before you get pre-qualified.
You can get an installment loan at credit unions, banks, and reputable online lenders. The time it takes to apply can vary with each.
Installment Loans in Florida
Rapid Auto Loans isn't like other lenders, in that we don't require a perfect credit score, or any credit at all for that matter, in order to provide a loan: just a functioning, properly licensed vehicle. If you need cash quickly, we're here to help. Call us today at 954-678-5781 if you have questions, or fill out an online application.
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