A good number of people are no stranger to financial obstacles. From all walks of life, people eventually find themselves at one day or another trying to figure out how to carry over an expense, deal with an emergency, pay for a once-in-a-lifetime opportunity, and similar. Unfortunately, what many folks don’t know about is that installment loans can be a far easier way to deal with financing expenses than other typical options.
Why? Part of the problem is that installment loans have traditionally be associated with only formal bank loans, but this is a myth. Today, many are eligible and can be approved for installment loans if they apply and ask.
A Viable Tool for Multiple Issues
An installment loan can be extremely helpful in tackling very common and frustrating financial tasks like:
- Getting a handle on credit card bills
- Buying a car
- Pay an unexpected medical bill
- Financing school tuition
- Going on a rare vacation
- Renovating a home
- Helping out a relative
And many times installment loans are far less expensive in terms of interest charges and fees than other options like loading up credit cards or lines of credit on a property or similar.
Payday Loans Versus Installment Loans
Installment loans are far better than the highly marketed option of payday loans. While a payday loan might seem very attractive, it is far more expensive to use than a credit card and even more expensive than an installment loan. Why? The fees involved pushing a payday loan cost into the stratosphere. By the time a borrower is done fully paying off a payday loan, the charges could end up being as much as 390 to 560 percent the original borrowed amount if the person does not pay it off in full for a year.
Folks might think that’s unlikely, but the reality many folks who take out a payday loan don’t pay it off right away and keep paying down a bit at a time, unable to get ahead. And that’s where the payday loan business makes an incredible amount of profit at the expense of the borrower.
With installment loans, the cost of borrowing is half or more of what one might face with a payday loan, and they have the added benefit of improving one’s credit score over time as payments are made. The payment amounts are manageable, and the interest rate is oftentimes fixed, making the loan easy to manage and predictable.
Starting A Small Business?
Installment loans can also be ideal for small businesses that need working capital to get started. Again, the structure and predictability of an installment loan as an option for small business loans protects the business and makes it easy to target and manage for repayment. This is a far better approach than variable loans that fluctuate constantly or loans that have balloon payments with big financial hits in a year or two down the road.