Installment Loans: Are they good or bad to avail
by Julian
All of us know that an installment loan is one of the popular loans among people because it allows borrowers to repay their loans in monthly installments. This is the reason why it is known as installment loans.
An installment loan may be good or bad, based on the way you handle the loan. An installment loan is good because it helps you to improve your credit history and achieve important objectives like home ownership.
On the other hand, installment loans are also bad for some borrowers because higher fees and interest rates apply to them. It indicates that the installment loan has benefits and drawbacks for borrowers.
How the installment loans are good
Here are some ways the installment loan is considered a good option for borrowers.
- Help you to build good credit.
After taking an installment loan, if you make the monthly payments on time, it will help you build your good credit history. In this way, they will give positive information about your credit to your creditors.
You can easily increase your credit score if you avail of the mix of revolving credit or installment credit.
- Used for different purposes
Once you avail, you can use your installment loans amount for different purposes. You can use the installment loan for home improvements, debt consolidation, large purchases, medical bills, etc.
Keep in mind that some installment loan is only used for particular things, such as a mortgage while purchasing the home. So, before taking the installment, you should check these features and determine whether it allows you to use them for several purposes.
- You can be paid off a loan early.
The best thing about the installment loan is that it allows you to repay the full loan early. In this way, you have to save yourself from the applicable interest rates.
How the installment loan is bad
Along with some good factors, there are drawbacks, due to which installment loans are unsuitable for some borrowers.
- Hurt your credit history
If you cannot pay the EMIs on time, it will badly affect your credit history and drop your chances by 5-10% of getting new credit.
- Higher fees
Installment loans come with higher fees or additional costs, like late payment fees, origination fees, etc.
- Offers lump sum of money
An installment loan only provides you funds once, unlike a line of credit or credit card. If you want to borrow money more than one time, then you have to avail of the installment loan again.
All of us know that an installment loan is one of the popular loans among people because it allows borrowers to repay their loans in monthly installments. This is the reason why it is known as installment loans. An installment loan may be good or bad, based on the way you handle the loan. An installment loan is good because it helps you to improve your credit history and achieve important objectives like home ownership. On the other hand, installment loans are also bad for some borrowers because higher fees and interest rates apply to them. It indicates that the installment loan has benefits and drawbacks for borrowers. How the installment loans are good Here are some ways the installment loan is considered a good option for borrowers. Help you to build good credit. After taking an installment loan, if you make the monthly payments on time, it will help you build your good credit history. In this way, they will give positive information about your credit to your creditors. You can easily increase your credit score if you avail of the mix of revolving credit or installment credit. Used for different purposes Once you avail, you can use your installment loans amount for different purposes. You can use the installment loan for home improvements, debt consolidation, large purchases, medical bills, etc. Keep in mind that some installment loan is only used for particular things, such as a mortgage while purchasing the home. So, before taking the installment, you should check these features and determine whether it allows you to use them for several purposes. You can be paid off a loan early. The best thing about the installment loan is that it allows you to repay the full loan early. In this way, you have to save yourself from the applicable interest rates. How the installment loan is bad Along with some good factors, there are drawbacks, due to which installment loans are unsuitable for some borrowers. Hurt your credit history If you cannot pay the EMIs on time, it will badly affect your credit history and drop your chances by 5-10% of getting new credit. Higher fees Installment loans come with higher fees or additional costs, like late payment fees, origination fees, etc. Offers lump sum of money An installment loan only provides you funds once, unlike a line of credit or credit card. If you want to borrow money more than one time, then you have to avail of the installment loan again.
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