​How To Choose The Right Installment Loan

Choosing the right installment loan can be confusing and you might find it difficult to go through all the information and trying to understand everything often makes things even harder. So, we’ve compiled a handy guide for how you can choose the right installment loan to make things just that little easier for you.

What Is An Installment Loan?

An installment loan is a type of personal loan that allows you to borrow a specific amount of money and pay it off in installments, normally every month, for a period of time set within the agreement. One example could be a $5,000 loan for 3 years.

What’s The Difference Between An Installment Loan And A Short Term Loan?

A short term loan is for a short period of time which will have fewer repayments required but might have a higher interest rate. Typically, a short term loan might require the full amount of money paid back on a specific date, inclusive of the additional interest.

Short term loans are often for a much smaller amount of money too, whereas installment loans are normally for a purpose and are typically much larger. For example, a short term loan might be for an unexpected bill which you will pay back in one month, whereas an installment loan might be for consolidating your debts which you will pay back in a number of years.

Each lender will differ in terms of their interest rates and fees, so it’s always worth checking out the details before taking out a loan. If you’re thinking about an installment loan and you think it might help you out - why not check out the installment loans by CreditNinja? You might be in luck!

So, How Do You Choose The Right Installment Loan?

If you’re considering taking out a loan, you’d need to consider exactly what you’re going to use the installment loan for and when you’ve done this, it’s important that you’re gonna get the installment loan that’s right for you.

It’s worth noting that by taking out an installment loan, you’re agreeing to borrow a set amount of money over a number of years - by doing so, this might accrue interest rates every year, so the longer the terms of the agreement, the more overall interest you might be paying.

You should always research thoroughly before agreeing to any sort of loan or credit agreement. Remember, there are always things to think about before choosing an installment loan:

Credit Score

Your credit score may dictate the terms of a loan or credit agreement. It can mean the difference between a favorable interest rate or an unfavorable interest rate added to your bill. Before you choose your installment loan, consider your credit score - is it good? The better your credit score, the better choices you’ll be able to make, and this will be massive when it comes to choosing the right installment loan.

APR %

The APR on a loan (and indeed for any credit agreement) is something you need to investigate and take note of right away. The higher that APR, the more you will pay on top of what you owe.

For example, if you’ve taken out a loan for $5,000, over the period of 4 years with an annual APR rate of 5% and with $0 in fees, the overall loan would cost $5,514.97 (meaning it costs you $514.97 in APR).

What About If I Have Bad Credit?

Having bad credit will mean you’ll have less in the way of offers for credit/loans - but even if you do have offers, they generally have a much higher APR, versus someone with good credit. If your credit is bad due to a poor credit utilisation and you’re looking to consolidate your credit card debts, then the loan might be a good way to help your credit grow.

It’s not impossible to get an installment loan if you have bad credit and it might even help you - so be sure you do some digging around and assess your personal circumstances to see if this is the right move.

The Repayments

The real problem with a loan is, they always want the money back! You should always check the terms of the loan and examine exactly how much the repayments are each installment. Be sure you check the first and last payment too, as oftentimes they are slightly higher or lower than the rest of the installments.

It’s also important that you check your own affordability to the repayments and whether or not you can commit to the repayment schedule for so many years. It’s quite a commitment and it’s an extremely important one in the view of your finances. Remember, missing a payment or having a late payment, even once - can be seriously detrimental to your credit score, so think very carefully about these repayments before accepting an installment loan.

How Is The Customer Service?

One key factor to a loan provider is how reputable they are - you don’t want to be caught with a loan shark! Do your research on the loan provider. Have you heard of them before? Are their terms acceptable?

You should always check their customer services and see if they are easy to contact and whether or not they have positive reviews. One important thing with taking out installment loans is that they will be for a number of years, so you’ll want to be sure that you’re doing business with a reputable company who is not going to ghost you, if you’re ever in trouble financially - or a company that makes you sign an agreement and never pays you! Check that they’re regulated and look into everything as much as you can.

Sometimes, credit bureaus can offer you installment loan offers based on your credit score and overall report. These companies might be more reputable than one you found online out of nowhere.

Whatever you choose, think carefully before taking out a loan!

This article does not necessarily reflect the opinions of the editors or the management of EconoTimes