With the increased cost of living, many people find their finances stretched thin these days, so they don’t have the cash up front to help them make a large purchase. That’s where installment loans can be beneficial.
An installment loan is a personal loan that gives borrowers up to $15,000 to spend on what they need. Even better, once approved, the money can be quickly and easily accessed.
Here is some important information about installment loans.
How to apply for installment loans
Borrowers can apply for installment loans online, through apps, or by visiting lenders’ physical locations. Anyone can apply for a loan, provided they:
- Are 19 years of age or older
- Have valid ID
- Have a chequing account
- Have a steady source of verifiable income
Once they’re approved, money can be accessed:
- In 15 minutes, through instant funding
- In 24 hours through Interac e-Transfer®
- Within 1-2 business days through direct deposit
What can installment loans be used for?
Installment loans can be used for any type of big purchase, such as
- Recreational vehicles
- Home improvements
How much can one borrow with an installment loan?
Installment loans give borrowers up to $15,000 to use as they need. The loan is offered at a fixed rate over a set term so that payments will be the same throughout the life of the loan. They will not increase based on interest rates.
Borrowers can choose the repayment terms for everything from 6 months to 60 months. This allows them to set regular payments they can afford, and if they can pay the loan off more quickly, there’s no penalty for doing so.
What are the benefits of an installment loan for large purchases?
With a credit card, the interest compounds if the borrower can’t pay off the full purchase amount before the following statement. In such cases, the borrower will pay interest on the interest. Even if minimum payments are made, the credit card balance won’t drop much with each payment because interest continues accumulating.
This is different from an installment loan, where borrowers know the total amount of the loan from the start. The interest is fixed and doesn’t compound. Unlike the revolving debt of a credit card, with installment loans, the money is only disbursed once, so as the loan is paid back, that money can’t be accessed again.
Some installment loans are considered unsecured loans. This means that when borrowers use an installment loan to purchase a vehicle, they don’t have to use the vehicle as collateral for the loan. They can sell the vehicle if they need to without worrying about a lien.
Additionally, an installment loan can help borrowers looking to improve their credit scores. If borrowers make their regularly scheduled loan payments on time or even ahead of schedule, they build up their credit scores.
The bottom line
For borrowers who want to make a large purchase but don’t have the cash up front, an installment loan can provide the funding needed without the stress or uncertainty of using a credit card.