Are you thinking about making a purchase that requires more cash than you have available? Perhaps a traditional loan may be less than appealing to you due to credit factors. If you are looking for a quick and simple way to get access to the money you need, then an installment loan may be a better option than other quick options such as payday loans. 

Similarities Between Payday and Installment Loans

Both of these options are designed to give borrowers quick responses to their imminent financial needs. They are also both designed to give people the option of renewing their loans or getting additional funds. However, installment loans afford borrowers the opportunity to borrow additional money with little or no additional penalties as long as the borrower has exhibited a good payment history with the creditor. Payday loans that are renewed often carry additional fees, which are absorbed by the borrower.

Credit Builder

Some types of loans may require collateral to secure them. There are also some lenders that do not report to credit bureaus. For example, a short-term payday loan may not be reported to credit bureaus even if you fulfill all requirements of repaying the loan. 

Keep in mind that people who are considered a greater risk may end up paying more in interest than people who are considered less of a risk. For example, a person who does not have credit history established or a person who has negative marks on their credit history could be viewed as higher risks than someone who has established credit with on-time payments to creditors.

This should not sway you from accepting an installment loan offer because it could be your first step towards creditworthiness. The best iInstallment loans offer borrowers the opportunity to build or rebuild their credit. This accomplished by making on-time payments. 

No Penalties for Early Payoffs

All loans are designed to offer creditors the ability to accrue profits off of the interest of the amount borrowed. Think of it as the creditor receiving a reward for giving people the money they need up-front and allowing them to pay it back over time. Paying off some types of loans early will result in penalty fees. You can save yourself from penalty fees by determining if your lender has a penalty clause. 

Affordable Payments

When the payment amounts for an installment loan are established, the lender should calculate the amount of monthly payments based upon income. Some lenders may ask for a rough estimate of your expenses too. The goal is to assign a monthly payment and repayment terms that are affordable to the borrower. A loan company that offers a variety of loan options to consumers is the best resource to use for determining the best type of loan for you.