An installment loan is a lump sum of money that you borrow and pay back in payments or installments over a set period of time. Once you repay an installment loan, you won’t be able to borrow from it again. If you need more money to cover future expenses, you’ll need to apply for and get approved for a new loan.
What can I use an installment loan for?
Installment loans can be used to cover virtually any large or small expense. Since they usually come with lower interest rates than credit cards and payday loans, they can make it more affordable for you to meet various financial goals.
How much can I borrow with an installment loan?
The amount you can borrow with an installment loan will depend on several factors, like the lender, loan type, loan term, and your credit score. However, installment loans often offer much higher amounts compared to other forms of financing.
Types of installment loans
There are a variety of installment loans you can choose from, including:
Auto loans
Auto loans are designed to fund the cost of vehicles. Since the car itself serves as collateral, the lender can repossess it if you default. Most auto loans are relatively easy to qualify for and offer terms that range from 36 to 72 months.
Mortgage loans
Mortgage loans can help you cover the cost of a home. You can choose from a fixed or variable interest rate and longer terms that are usually 15 or 30 years. There are conventional mortgage loans and government-backed loans like the FHA, USDA, and VA loans.
Personal loans
You can use a personal loan for a variety of purposes, like paying off high-interest debt, home improvement projects, car repairs, and vacations. While secured personal loans do exist, most of them are unsecured and don’t require collateral or an asset you own.
Student loans
Student loans are designed to fund the costs of post-secondary education. You can use them for expenses like tuition and books. Student loans are offered by the federal government and private lenders.
How to apply for an installment loan
Most lenders will allow you to apply for an installment loan online from the comfort of your own home or office. Some also accept phone applications or in-person applications at a local branch. While every lender has different requirements, most will ask for these documents when you apply:
- Government-issued ID, like a driver’s license or passport
- Proof of income, such as W2s or pay stubs
- Proof of employment
- Proof of address
While it might take some time for lenders to approve installment loans like mortgages and car loans, personal loans usually come with fast approvals and same day, next day, or several day funding.
The Bottom Line
As long as you pay them back on time, installment loans can come in handy. If you don’t have access to unlimited amounts of cash, you can use them to meet various financial goals. Just make sure you shop around and compare your options so you can find the right loan for your unique situation.
Notice: Information provided in this article is for information purposes only and does not necessarily reflect the views of [publisher] or its employees. Please be sure to consult your financial advisor about your financial circumstances and options. This site may receive compensation from advertisers for links to third-party websites.
