There comes a time where you’re stripped for cash and you need to pay for something. Here is where an installment loan can help you. Such a loan allows you to borrow a certain amount of money upfront and then pay it on according to a pre-set schedule. In most cases, such a loan is also referred to as a payday loan.
The two other common types of installment loans are mortgages and car loans. When you go to a bank to ask for a home or auto loan, they’ll calculate the principal plus the interest rate and then provide you with a repayment schedule. Installment loans can either be long term or short term.
Understanding Installment Loans
It is fairly easy to understand how installment loans are the easiest to computed and set up. Sometimes, the bank would require a down payment to make the monthly amortization lower. The payments for installment loans are regular, which means you’ll pay the same amount every month. This also indicates that its interest rate is fixed, thus making it easier for you to plan your finances ahead.
The use of a loan amortization calculator is useful to determine how much you’ll pay for your installment loan over a certain period of time if you pay a certain amount as down payment. It’s also possible to do the computation manually.
How Installment Loans Affect your Credit Score
Your good performance on installment loans can boost your credit score. As a matter of fact, if you use different types of debt, you’ll get the highest possible credit score. Paying your installment loans on time suggests that you’re a responsible borrower. On the other hand, using your credit card for all purchases would indicate that you’re paying too much for a lot of things.
But then again, you shouldn’t get too many installment loans. Just stick to what you need. Simply choose from a home loan, auto loan, or a student loan, but try not to get everything at the same time. If installment loans can boost your credit score, it may also hurt it if you’re not careful.
Installment Loans and Bad Credit
Over the years, installment loans are quite popular among borrowers with a bad credit. Also referred to as payday loans, these loans are referred to as short-term loans that are rather easy to secure but usually comes with have a fairly high interest rate.
Short-term installment loans are usually expensive loans. If you really want to avail of it, try to apply for one from a credit union or a bank. If you won’t qualify for a loan from a bank, your other choice would be a reputable P2P loan provider. This type of service is also quite popular these days.
If you need help with installment loans, consult with a West Jordan installment loan expert and he or she should be able to tell what to do about it. They’ll provide you with all the information that you need to know about this type of loan, and whether or not you’re qualified for it. It’s important that you know exactly what you’re getting into before you embark on this type of loan as it may negatively affect not just your credit score but your lifestyle as well.