We should be grateful to install loans for their versatility because they are everywhere in the small or long-term. No loan can be repaid at once; installments are the ultimate result for anyone who borrows funds. People have different perceptions about installment loans, but rational knowledge about them must explain their core nature and how they act clearly.
A look at varied sides of installment loans
It is now better to understand the nook and cranny of the loans, understand it deeply, and better understand how they work. It is useful to know about the available options for current and future financial decisions because money needs can arise anytime.
What are installment loans?
Installment loans are the borrowing options with short-term and long-term tenure in which money is borrowed under a legal agreement. The borrower of funds needs to repay the borrowed money in the decided number of installments spread in tenure of several months to many years.
Examples of installments loans
You can take any name as an example of installment loans because every loan is paid in monthly repayments. However, there can be some exceptional cases, such as payday loans that you may borrow at the month-end and can pay off completely on the next month on the payday. But more or less, all borrowing options are installments loans. However, still, it is good to have a look at the popular examples.
- Personal loans
- Business loans (short-term as well as long-term)
- Holiday loans
- Car loans
- Debt consolidation loans
- Payday loans (if not for only one month)
- Education loans
Benefits of installment loans
- Instant approval decision – Whether it is about short-term or long term installment loans, they are available on instant approval decision. Within 10 minutes of submission of the application by the applicant, the result appears. Sometimes it even takes less than 10 minutes. However, in the case of big loans such as a mortgage, the initial approval may take up to 30 minutes. It is due to the longer verification procedure in bigger amount borrowing.
- Personalised pricing – Individual circumstances are always the prime factors in installments loans. When a lender decides the rate of interest and repayment schedule for a person, it does not apply the generalised rules. This facility is the biggest strong point for the people of FinTech lending. However, there is always a minimum limit of cost. The lender cannot offer a cost less than that.
- Flexibility to reschedule repayments – Of course, the circumstances dominate everyone in financial and personal life. Sometimes borrowers who are paying on time get into difficult conditions and feel the need to change their repayment schedule. Repayment on the same plan is perhaps difficult for them. Installment loans offer this flexibility to their borrowers, and they can get the changes done after talking to their lenders.
- No purpose constraint in case of personal loans – We know how popular the personal loans are, in fact, it is among the most sought after loan products. A big reason for this can be its feature to give liberty to the fund bearer to use the money for any cause or purpose. During the application process also, you do not need to mention anything as a specific reason. Isn’t that a big liberty to be used for financial well-being?
One BIG difference in short-term and long-term installment loans
Of course, you can easily find many different points between the two, but one point is very prominent. It is important because it can affect your approval chances on a loan.
Initial approval may not be the final approval in long-term installments loans, whereas in short-term loans, the first approval decision is the final one.
If you haven’t understood, then take the example. You apply for a personal loan and receive the approval decision. Whatever result comes ‘accepted’ or ‘rejected’, it is the final one. In the case of long-term ones, for example, the mortgage application. Initially, the lender may approve your funds when it considers your basic financial and personal conditions. Nevertheless, during the loan process, the lender does a thorough check of credit records, current income, job stability etc. If something looks unfit, even the approved loan can turn into rejection.
Prime factors to know before you expect approval
Every fund seeker needs to have some conditions in his personal and financial life to qualify for a loan product. Instalment loans are exceptional cases. Here are the points you need to consider before applying for them.
- Stable current earning – Whether you are a salaried person or a businessperson, your current earning should always be promising for the lender. Promising means the income should be regular and able to encapsulate the installments of the new loan.
- Employment stability – You cannot win approval easily, especially in long-term installments loans, if there is no job or career stability. Do you switch jobs quite often? Then it can become a reason to worry because it is not something that lenders look forward to. At least 6 month of stability for short-term loans and two years of stability for long-term ones is vital.
- Timely paid bills – The finance companies always want to know how punctual you are in paying your bills. They need to sense your repaying capacity, and for that, they should see timely payments of utility bills and other debts. This one factor can considerably change the decision of the company on your application.
Installment loans for bad credit are ACTUALLY available
Yes, it is a great benefit of using installment loans to feed your financial needs because we all know that countless people across the globe struggle from poor credit situation. They have to bear a big loss in their financial life due to derailed payment record.
Fortunately, installments loans are friendly to every credit score status, even to the worst credit rating if the person is following the agreement on the pending obligations. However, one should know that the conditions for bad credit loans are decided, and there can be no compromise on that part.
For an applicant with a good credit score, some flexibility in terms and conditions is possible. For example, the extent to a lower rate can be increased to a lower number due to the good payment history. But those with spots of missed and delayed payment need to prove their creditworthiness.
Bitter or sweet, a truth cannot be changed that the poor credit borrowers need to work hard to prove their financial stability. The lenders need to feel secure about their lending decisions because they also have to follow the rules made by the regulatory authorities.
The information above explains the significance of the instalment loans and also tell how efficiently they fulfil the concerns of the people. From daily needs to the big needs that arise occasionally, the loans can fulfil all needs in a small and easy manner. If you are searching for financial respite, you can avail yourself of funds. If you have already explored this choice, then there is no need to explain things. It is worthy of having a stable financial situation because FinTech options, including instalment loans, are flexible, but the final decision maker is the applicant’s financial condition.