Everyone experiences times when they are short of cash. A plumbing emergency after a bad storm or unexpected car repairs are just two examples of situations that can cause a lack of funds. So what can you do when you’re short on cash and short on time before your next paycheck?
Installment Loans 101
An installment loan is one of the easiest ways to get a quick influx of cash. It allows you to borrow money from a financial institution. Unlike credit lines that can be increased, an installment loan has a predetermined amount of money being borrowed.
Once the funds are loaned to you, you must repay the loan in a certain amount of time. The payments are typically monthly payments of a fixed amount, but they can also be bi-monthly or on another type of schedule to fit your personal needs.
Most Common Types of Installments Loans
Some of the most common types of installment loans are auto loans, student loans and mortgages. However, more and more people are turning to short term loans and payday loans to make ends meet.
Short term loans are loans meant to be paid back in a short period of time - often three years or less. Payday loans provide the money you’ll get in a future paycheck and need to be repaid when your paycheck arrives, usually a week or two. Both are options for fast access to cash, regardless of your overall credit.
Pros and Cons of Installment Loans
As mentioned, bad credit doesn’t prevent you from getting approved for short term loans, payday loans and other types of installment loans. However, bad credit will likely raise the interest rate of the loan, causing you to pay back more money than you originally borrowed.
The payments are often due on the same day every month, making it easy to work the repayment into your monthly budget. Before you apply for a loan, you should be sure that the total amount is financially feasible for you to repay.
Final Thoughts
When shopping around for an installment loan provider, pay careful attention to the interest rate and how long you have to repay the loan. Many financial setbacks start by taking out a loan you can’t pay back. Short term loans and payday loans are among the most popular types of loans.