An installment loan is defined as a loan wherein a set number of scheduled payments is made in a specific given period of time. For example, Jane needs to pay $1,000 for an emergency medical expense. Jane can take out an installment loan requiring her to pay the amount back in twenty-four months at a 25% interest rate. When it comes to an installment loan given this situation, Jane will need to pay $53.37 for a period of 24 months. What makes an installment loan different from a payday loan? Generally, payday loans are short-term, with higher interest rate, and are usually paid back as a single lump sum payment on the borrower’s next pay period. In contrast, an installment loan usually last for many months and there is an even spread out of payments over the term of the loan.
Installment loans is the best option for people without a credit history, for those who have bad credit or poor credit, in order to help to build a good credit history. Installment loans are requiring multiple payments, helping in creating a history of repayment. A borrower’s payment history is reported to credit reporting companies or agencies, thus helping improve a credit score of borrowers with a good payment history. Having a bad credit can really ruin your finance reputation most especially if you make business transactions, so dealing with an installment loan can help build and establish a good reputation. An installment loan is a good solution for those needing extra funds that beyond cash advance can offer. Borrowers are given more flexibility to decide how much they can borrow and the duration of time they can pay it back. A borrower can decide on a long-term loan with smaller payments or vice versa. Installment loans are not yet available in all states, with some states dictating the maximum and minimum loan amounts that can be borrowed in an installment loan.
Installment loans involve applicable fees and interest charges, and if the borrower is unable to make on-time payments, then any late fee must be notified to the borrower before application and collection. As required by the U.S. law, the lender should express all charges clearly in dollar amount including the annual percentage rate (APR). Allow Bonsai Finance to help you get an installment loan so you can create a good payment history, most especially if you are dealing with a bad credit or poor credit standing. Instalment loans can be your best option in times you need to establish a good payment history, and we can be your partner!