Personal Loan or Installment Loan. Is There a Difference?
There are many types of personal loans available to consumers, each of which comes with its own set of repayment terms, finance charges, fees, and other terms. Installment loans fall under the umbrella of personal loans and can be used for short-term financial needs including emergency expenses. Yet they differ from other fast-cash loans. Here’s how they work.
Installment loans can provide you with the money you need to help cover one of life's many unexpected expenses.
Most people probably know what a personal loan is, but what about an 'installment loan'?
Personal loans are typically granted to qualified borrowers who are in need of additional money to cover a wide range of needs. Whether it's to cover the cost of an unexpected medical bill, home repair, car repair, or any other type of expense, a personal loan can help you meet your needs in real time.
There are many types of personal loans available to consumers, each of which comes with its own set of repayment terms, finance charges, fees, and other terms. Installment loans fall under the umbrella of personal loans and are repaid over a mutually agreed time period with a specific number of scheduled payments.
An installment loan is simply a version of a personal loan.
What's the Difference Between Installment Loans and Other Types of Fast-Cash Loans?
It's important to differentiate between an installment loan and a payday loan. Both involve small dollar loans. While payday loans typically need to be paid back in a lump sum on an agreed upon date - usually on the borrower's next payday - installment loans can be paid back over time in regular installments.
In addition, payday loans are for a shorter time and installment loans may extend for several months.
Like other types of personal loans, whenever you are able, you may pay off your installment loan early without being subject to penalty charges for doing so.
Installment loans are just one of many different types of personal loans.
How Do Installment Loans Work?
Most installment loans require an application. When you apply for an installment loan and are approved, you borrow a specific amount of money from a lender and repay the loan – along with finance charges and fees – on specific dates over a set period of time. Each loan is unique to the customer.
Before you are approved for an installment loan, your lender will review a number of qualifying criteria to best determine your ability to take out a loan. All these factors combined provide your lender with an in-depth perspective about how likely you will be to follow through with all payments until your loan is paid back in full.
Of course, understanding all of your loan options and qualifying requirements is important before choosing the installment loan that's right for you. By being an informed consumer, you can better ensure that you qualify for the loan that best suits your specific financial situation.
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