Installment loans work by having borrowers repay the loan through regular monthly payments, or “installments.” There are many different types of installment loans. Basically, any loan that requires regular monthly payments would be considered an installment loan.
Here are a few of the most common types of installment loans available:
Auto Loans – An auto loan is, you guessed it, a loan for buying a vehicle. These are some of the most common types of installment loans available. If you’ve bought a car and financed it, then you’ve had an installment loan. Auto loans are commonly paid off within five years, but your specific repayment conditions will depend on the lender.
Mortgages – A mortgage is a loan for purchasing a home. These tend to be very large loans since homes are expensive. They’re usually set up to be repaid in either 15 or 30 years. The type of mortgage you get, the interest rate, and the repayment terms will all depend on your specific financial situation and the lender you choose.
Personal Installment Loans – These are unsecured personal loans that borrowers use to pay for unexpected expenses, medical bills, car or home repairs, and more. They’re usually designed for borrowers with low credit scores, and they’re widely viewed as a better alternative to other fast cash options like title loans and pawnshop loans.
Traditional Bank Loans – These personal loans are generally reserved for borrowers who have decent credit scores. If you have a good credit score and need a large personal loan, then a bank may be your best bet. You’ll be able to get a good interest rate assuming you have a good credit score.
Choosing a loan, no matter which kind you need is a difficult decision to make. It should take a lot of serious consideration and research. Look up the lenders, compare prices and terms, and ask lots of questions. This is the only way to get the best loan for your situation.