You have probably heard of car loans, mortgages, and payday loans, but do you know what an installment loan is? Installment loans come in many forms, and car loans and mortgages fall into this category of loan type. You can also get personal installment loans. Here are three vital things to know about personal installment loans if you need some quick cash.
What You Can Use Them For
A car loan is something you use to purchase a car, and you use a mortgage to buy a house. A personal loan, though, is a loan option you can use for any purpose. You can use it to pay bills or to fund a project. You can use it to pay off high-interest credit card debts or to take a vacation. The bank that issues you the loan deposits the money in your bank account, allowing you to spend it as you wish.
How They Work
When a loan is an installment loan, it means that you repay it over time through equal monthly payments. Your loan might last for one year or longer, but the payments will be equal. If you want to get a personal loan, you must apply through a lender that offers them. Lenders evaluate the applications they receive and respond based on their findings. If you have great credit and can prove that you have income, you might be able to borrow thousands of dollars. With poor credit, you might not get approved. If you do, you might only qualify for a small amount of money, or you may have to pay a higher interest rate.
How to Pay One Off Early
If you get a personal installment loan and want to pay it off early, you can. Before you do this, make sure your loan does not have a prepayment penalty clause on it. If it does, you can repay it early, but the bank will charge an extra fee if you do. Therefore, you might not want to pay it off early in this case. If you decide to pay it off early, you can pay extra each month to accelerate the loan. You can also make a balloon payment for the balance anytime you would like to pay off the loan.
Borrowing money for a large purchase or for other purposes is something people do often. If you need some cash for a purchase or another reason, you can consider an installment loan. If you are ready to apply, find a lender today that offers these loans.