If you are experiencing a temporary financial crunch and need an installment loan to smooth things out, an installment loan is typically the ideal choice. However, there are many different lenders and installment loans can include both reputable banks from a trusted lender or short-term loans from less reputable lenders. Accepting a loan with unnecessarily high rates or fees can help you get through today, but can make it more difficult to pay back the loan in the future. Therefore, it is crucial to know how to choose the right lender and type of installment loan, which means that you need to know what questions to ask before signing anything.
What Is An Installment Loan And Is It Right For You?
It is not unusual to become confused about the differences between installment loans and payday loans. Payday loans are usually provided by a store, a website or a store that offers a website. Payment is usually expected in full within a short period of time, typically on the next payday and usually presents with higher interest rates than a traditional lender might.
The confusion occurs because many payday loans are often called installment loans, but the two vary greatly. Typical Installment loans offer several months or more for repayment and can often loan larger amounts of money. They present with all of the standard requirements of any loan, including credit checks, employment verification and in some cases, collateral. Payday loans do not usually do a credit check and may require your banking information to guarantee the loan, but typically can only offer smaller dollar amounts.
If you are eligible for an installment loan from a traditional lender, you may find that it is easier to pay back, due to smaller payments and more generous payment deadlines than a payday loan.
How Clear Are The Lending Requirements And Terms For Repayment?
It is important to note that there is usually a lot of fine print in a contract with any loan or other financial agreement. It is often tempting to skim the agreement and then sign it, without giving full attention to each page.
Unfortunately, that fine print often contains some very important information about:
- Late fees
- Origination fees
- How and when information about the loan may be entered into your credit report
- Interest rates
When in doubt, be sure to ask the loan officer or bank employee to explain the information within the document before signing anything.
In conclusion, many people have benefited from installment loans over the years. They are frequently available in smaller amounts and therefore, are often appropriate for individuals who are building or repairing their credit scores.