Installment loans are personal loans where the balance is paid back in fixed installments which cover the interest and part of the principal.
Some common examples are online payday loans, car loans, and home mortgages. A good rule to remember when looking for financing is that the more you need, the longer you will be paying it off and the faster you need the funds, the higher the interest rate will be.
Fast Loan Options
When people think of fast loans, payday lenders are usually at the top of the list. These loans are usually applied for online and approved in hours, with high interest rates and fees associated with them. Most payday loans do not require a credit check, just proof of employment, and are designed to be paid back with the next paycheck. There are other, more modern, forms of payday financing which are referred to simply as installment loans. This type offers the quick cash with a longer repayment period and lower interest rates. Where payday loans can have an annual percentage rate between 300% and 500%, you can find a fast, online installment loan, or pret rapide en ligne, with half the APR and which can be paid back over a three to five month term.
Short-Term Loan Options
Short-term loan options can include fast loans, but usually refer to loans which have repayment terms no longer than five or seven years. When your loan is secured with collateral, such as a car loan, those assets are a guarantee to the lender because your car can be repossessed and sold to recover some losses if you default. The amount of these loans is dependent on the value of the collateral and your approval depends on your credit. Unsecured loans, those without collateral, are based on your credit history and are more of a risk to the lender. The interest rates are usually a bit higher than secured loans and lines of credit can fall into this category.
Long-Term Loan Options
Long-term lending is usually designed for large purchases that need decades to pay off, such as residential and commercial properties. These have lower interest rates and are harder to get than other types of installment loans. Long-term loans are usually secured by the assets they are used to purchase, such as a house or retail property, and you may be required to submit more documentation to apply for them.
Finding the right installment loan means determining how quickly you need the funds, how long you want to be paying it off and how much you need. The more financing you need, the longer the term will be and the lower the interest rate is.
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