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We all like to be prepared, but there are some things a monthly budget doesn’t plan for—your dog’s emergency vet visit, a tree falling on your car, any number of tricky situations from mainstream insurance commercials. Luckily, there’s a reliable solution that offers fast access to borrowed cash and allows borrowers to pay off the debt in structured, manageable intervals: the installment loan.
Installment loans offer a range of benefits that can help ease the burden of budgeting and financial management. From set payments to a healthy financial mindset, let’s talk about some of the ways these loans set you up for success.
Perhaps the most appealing of installment loan benefits is the fact that they come with a fixed payment schedule. You’ll be able to work this into your budget, knowing how much is due at every biweekly or monthly payment. Let’s say you’ve taken out an installment loan. That fee will roll in with the monthly bills—it’s something you can plan for, including the amount and interest rate you will have agreed to upon taking out the loan. You turn an unexpected expense into a routine one.
Other loan options can fluctuate and have unclear payment structures. Payday loans are generally smaller amounts due all at once on your next payday. Credit cards offer minimum payments that can take years to pay off, with compounding interest that can quickly grow. Installment loans, however, give you access to a lump sum immediately and let you pay back debt reasonably. We’ll discuss this more shortly.
Traditional bank loans usually require a hefty application process in which potential borrowers are eliminated for low credit scores without much thought. Installment loans tend to be more accessible to those with less-than-perfect credit scores—none of us are perfect, and while many installment loan providers consider credit history, they also recognize that you are more than your credit score and offer more leniency. Another benefit is that repaying an installment loan can actually help you improve your credit over time, making future loans more accessible as well.
As we alluded to earlier, one of the advantages of installment loans is the opportunity for lower interest rates compared to other types of short-term loans. While payday loans and some credit cards tend to carry higher rates that can compound quickly, installment loans often offer more reasonable rates.
This makes it easier to manage monthly payments without worrying about substantial added costs. By choosing an installment loan, you may end up saving money on interest over time, especially compared to options like high-interest credit card debt. With a predictable rate, you can stay on top of payments while reducing overall costs.
Using an installment loan to cover a sudden expense can save you from emptying out the emergency fund. This can save you from financial vulnerability and be a huge benefit later on; in a massive financial crisis, your emergency savings will still be available to you because you took out an installment loan. Plus, keeping those savings can offer you something a lot harder to buy: peace of mind.
Though borrowers must still fulfill their end of the loan agreement, paying it off by the defined date, installment loans often come with a range of repayment term options. This allows borrowers to select a timeframe that best fits their budget.
Unlike other types of short-term loans, installment loans let you choose a schedule that aligns with your financial goals, whether you want to pay off the loan more quickly or prefer to spread payments over a longer period.
With this flexibility, managing unexpected expenses becomes more manageable. Whether repaying biweekly or monthly, the structured approach lets you incorporate payments into your financial plan more easily.
Ready to talk about how installment loans can work for you? Talk to us at Credit Central or apply for a loan online today.
