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Installment loans: All the Information You Need

By Edited Nov 13, 2013 0 0

Many lenders in Illinois are turning to installment loans to beat the restrictions put on payday finance by the state. These loan are short term finances that have to be repaid over a given time duration using regular payments that will make up the principal and the interest. Many borrowers take these loans to purchase a home, vehicle, furniture or other items.

How do installment loans work?

There are cases when you need cash fast for an unexpected emergency. These loans are suitable for you because you can easily get them quickly. You negotiate with the lender and agree on the interest, terms and repayment dates. Once you receive the money applied for, you keep on paying the balance in installments till you clear the balance.

You can authorize the lender to automatically deduct the loan amount from your paycheck so that you don't miss any payment. You can also accept to receive email notification to remind you of the payment dates.
Once the loan application is accepted, you money will be disbursed through a check or a direct deposit into your bank account.

Interest is usually charged on each payment, and you can decide to pay the money early and attract less interest. Some lending companies do not allow you to offset the loan early and may charge you extra. They do this because they want to enjoy the full interest when you pay the loan in full.
What options do you have when you go for an installment loan?
When you go for an installment loan, there are different types you will choose from. These can be according to whether the loan is secured, or according to the interest type you will pay.

Secured vs. Unsecured

Unsecured loans. If you have a good credit standing with your lender, you will have the chance to take out this type. You will also be considered for this type of loan if you have a good job status and previous payment history.
Secured loans. Under this, you are offered the loan against collateral. This is held on till you clear the amount you borrowed plus the interest. If the loan is not paid on time, the item you have used as collateral can be sold to recover the loan amount.

Simple vs. Fixed interest based

Simple interest based loans. The interest you are supposed to pay is calculated based on the difference of the last date and the current processing date.
Fixed interest based date. The interest for the installment is calculated on the different days of the last date for installment and the current date for installment.

What do you consider when choosing an installment loan?

Before you fill out that form for an installment loan, take some time and check out the factors that will affect your decision. Some of these factors are:
Ask your close friends and colleagues about any lenders they know and have used before. These referrals are very important for you because they know how the
The reputation of the lending company. You will need a company that has a good reputation. Go online and check the Illinois business bureau and check the background of the company. Look for any complaints that have been raised against the company.
You need to check the eligibility conditions that the company requires from you. Some companies will have strict conditions that will not suit you. These include conditions on the job you are doing, the salary you are earning or whether the business needs security from you.

You should know the maximum amount of money the lender can give you. Some will give you a percentage of your salary or a fixed amount which may not be adequate for your issue.

Know the repayment options that you have. This will include paying back the cash in one installment as a onetime reimbursement or paying twice each week, monthly or a specific number of installments.

Several companies have different charges. Ensure you know what the company will charge you at the end of the loan period. Know whether they charge you a registration fee and the interest rate that you will be charged. This will determine the affordability of the plan you choose in the long term.

Sometime you will need to renegotiate the loan terms to suit your needs. You need to know what will happen when your financial situation changes. Some companies will give you penalties when you pay off the loan early.
Take some time and read the fine print of the loan agreement. Be sure to ask questions where you don't understand so that you make an informed decision.

What are common eligibility criteria for installment loans?
Generally, most lenders will need you to have certain qualities so that you can be eligible for the loans. These include:
You have to be a resident of the USA to get the loan
You must be 18 years and older
You must have been on the job for the past six months
Your credit history needs to be good
You need an active bank account that accepts direct deposits

What are the advantages of installment loans?

When you use an installment loan, you will not worry about an increase in the interest rates because the rate is predetermined. As a borrower, you will benefit from the knowledge of knowing what o expect each pay period.
The loan is paid after a long period of time in manageable installments. The duration of pay makes you manage your repayments easily. The installments can be paid biweekly or monthly thus the borrower can budget the money better and reduce the worries over debdt

It takes as short as a few hours up to two weeks to get the money. The requirements for the loan are not so stringent and you don't need a lot of documents. This loan can be processed very fast and is convenient for emergencies. You can also get the loan without having collateral.

In case you need to renegotiate the duration needed to pay the loan, it is possible to do so. This makes it flexible for you.
Finding a suitable installment loan for you will help you get out of a financial stalemate.


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