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Installment Loan Definition

What is installment credit?

Loan an installment credit refers to a loan for a certain sum of money. The borrower agrees to pay a certain number of monthly payments, each of which will be a set amount of money. The length of time it takes to repay an installment loan might vary from months to years.

Deeper definition

The following are the most common types of installment loans

  • Mortgage loans – You finance the amount borrowed by taking out a mortgage over a specified period of time, usually between 15 and 30 years. After you make all payments, the house is yours.
  • Student loans — A student loan is a kind of loan that enables you to borrow a certain amount of money to cover the expenses of your education. The lender will repay you when you have graduated from school over a certain period of time. For people who are unemployed, a few student loans allow them to postpone payments.
  • Auto loans – If you don’t have enough cash to purchase a car outright, you’ll almost certainly need to take out an auto loan. A secured auto loan is one in which the financing company has agreed to repossess your vehicle if you default on your payment amounts
  • Unsecured loans – If you have strong credit scores, your bank or credit union may be willing to give you money. People with bad credit are charged hefty interest rates and fees by payday lending providers.

Are you thinking about getting an installment loan? Here’s how to get the best loan rates.

Examples of Installment Loans

Lenders want proof that you’ll pay back the loan. These are some of the considerations they make when considering whether or not to lend you money.

  • Your credit score and how successfully you have handled your bills in the past.
  • The relationship between your yearly income and your debt-to-income ratio.
  • What length of time you have been employed by your current employer, or in your current job.
  • If you have additional income sources.

Tags

principal and interest
loan terms
fixed interest rate
set number
loan amount
a credit card for no credit history
revolving credit
advertiser disclosure
higher interest rates
regular payments
types of personal loans
credit scores
timely payments

 

Jason Rathman