The Truth of Installment Loans with The Positive and the Negative

Installments have their good features and they have some bad features. Short-term installment loans have been a natural response to payday loans. Potential borrowers turned away from the high fees and lump-sum repayments can take on an installment loan. The idea is generally the same as with payday loans. Borrowers receive a modest loan total (somewhere in the ballpark of $1,000) and they pay it back over a short period of time. The money comes in right away. With installment loans, borrowers can pay it back in pieces over a few months to a year. Payday loans typically require a lump-sum exchange, which can turn people away.

Fixed Rates and Other Benefits

Installment loans are almost always fixed. They stay the same no matter the circumstances. The fees are accounted for in the life of the loan, and do not get “smushed” onto the end. Further, installment loans can be extended for upwards of a year or shorter based on the preferences of the borrower.

Of course, the greatest feature with is the fixed installment repayment. It is a clear advantage for many people who are flustered by the idea of unloading their entire paycheck at the next pay period. Payday loans are not even remotely sustainable for that reason alone. Borrowers should not be expected to unload their whole paycheck, as is the case with payday loans (it is in the name, after all).

A Few Negatives to Watch For

There are some negative things that deserve strong consideration. For one, the fees are more substantial than commercial and bank loans. The reason is rather simple. The accessibility of payday-oriented loans justifies a higher fee rate. There is no credit check and no arduous process of organization and paper filing. Typically, borrowers can get a loan within 24 hours. The money is to be used however they please, with no strings attached that could be typical of bank loans (such as limits, holds, transaction fees, etc).

Ultimately, installment and payday loans are most beneficial in certain circumstances. Borrowers facing a tough (albeit temporary) period of financial distress could use them. A brief boost in bills compared to income could justify an installment loan. Regardless, responsible and logical borrowing is highly recommended.

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