What Is an Installment Loan: Different Types and Uses
If you are in need of a large amount of funds to make a purchase or pay for something that is out of your normal budget cycle, you may consider taking out an installment loan to help your budget be able to cover all your expenses. The term “installment loan” may seem a little unfamiliar to you, but you may be surprised to find out that you may know about (and may even have already used) some types of installment loans.
So what exactly is an installment loan? This blog post will answer your question as well as give you some concrete examples of different installment loans. If you have a sudden need for funds, one of these loans may be the answer you are looking for!
What Is an Installment Loan? Different Types and Uses
If you have a sudden need for funds, taking out an installment loan may be the answer you are looking for. Here are some crucial details about installment loans that you may want to know about before applying for one.
What Installment Loans Are
Installment loans are used for purchases that are too large to be included in the monthly budget. The amount for these purchases will usually be too expensive for them to be included as only a single entry in your monthly expense list. These loans will be payable over a period of months or even years. Unlike credit cards, lines of credit, and other forms of credit, installment loans will have a finite and definite amount that you have to provide beforehand.
Examples of Installment Loans
Here are a few examples of installment loans, some of which you may already be aware of.
1 - Mortgage
This is a type of installment loan that is used to help a person and their family purchase a home. The loan terms for this type of loan usually fall between 15 to 30 months with monthly payments. The interest rates for mortgages may vary. It is vital that a borrower looks into the interest rate they agree to. Standard mortgages usually have fixed interest rates that do not change throughout the course of the loan.
2 - Auto Loans
This type of installment loan will help a borrower obtain funds to take out a vehicle. These loans will usually have a life of around 12 to 96 months. Auto loans that have a longer term may have lower monthly payments but will come with higher interest.
3 - Personal Installment Loan
Like auto loans, personal loans will also have an average term of 12 to 96 months. However, they can be used for various financial needs. These loans will usually have a higher interest rate than other types of installment loans.
While there are many benefits that come with taking out an installment loan, it is paramount that you take time to fully understand the specific terms and conditions of any type of installment loan that you agree to. If you are able to find an installment loan with reasonable terms and that will fulfill your financial needs, go for it! However, if you are confused about any aspect of the loan, it is wise to consult a professional loan specialist before agreeing to move forward with it.
Should you be interested in applying for any of the types of installment loans above, come to Hometown Finance! We provide installment loans in Murfreesboro to those who need
help. Call us and let us help you get the funds you need today!