An installment loan is a type of loan used to finance a vehicle, property, or higher education. Borrowers receive a lump sum after their application is accepted by the lender. He then repays the loan over a fixed period in EMI installments.
They can prove to be a useful tool in times of need. They are better than credit cards and are available at low-interest rates. An installment loan is a contract in which the loan is repaid over time through regular payments. They are safer and more economical than payday loans and open-end loans like credit cards. Contact us for affordable and easy installment loans online.
Types of installment loans
There are many types of installment loans, but the two main categories are secured and unsecured installment loans. In secured installment loans, borrowers have to pledge their security to get the loan amount. The collateral for a mortgage loan is the real estate that you buy with the loan, and the collateral for the car loan is the car that you buy with the loan. Failure to pay fees may result in the loss of these securities.
Unsecured installment loans, meanwhile, do not require collateral. Lenders simply evaluate borrowers’ credit scores and ability to settle debt before processing personal loan applications. This means that the personal loan interest rate applicable on an unsecured loan is usually higher than the rate charged on a secured loan.
Here are some of the common types of secured and unsecured installment loans:
- Personal loans
These EMI installment loans can be used for many things including debt reduction, medical bills, home improvement, and weddings. You can easily get a personal loan from banks and non-banking finance companies (NBFCs). Many institutions offer personal loans online. You can get a personal loan of any amount you need, even if the interest rate will be high.
- Car loans
Car loans are used to finance a vehicle. However, if you default on the loan amount, you may lose your car, as the car is the collateral for the loan. Auto loans often have lower interest rates than unsecured loans.
- Housing loans
Home loans are a type of secured EMI installment loan used to buy a home. Your property serves as collateral to protect the lender, helping lower mortgage interest rates. However, if you can’t meet your loan obligations, you could lose your home.
- Student loans
Lenders can provide installment loans online to help pay for a college education. The interest rate, repayment period, and repayment amount depend on many factors, including your credit score.
An installment loan can help you finance a car or property. However, like any other product, it has advantages as well as disadvantages. Flexible terms and reduced interest rates are helpful for borrowers, but the possibility of default can be a problem. Therefore, do a thorough check before getting an installment loan. Before you choose, look at and compare the rates and terms given by different lenders.