Most people take out an installment loan in some form at some point in their lives. Installment loans offer a convenient way to purchase large-ticket items that you otherwise couldn’t afford outright, such as an automobile or a home. They can also be used to finance smaller amounts of money for an emergency such as a home or auto repair, a medical bill or debt consolidation.
What is an installment loan?
As the name suggests, an installment loan is a loan paid back through several installments. While the terms of the loan can vary, the monthly payments are typically a fixed amount. The predictable repayment allows you to manageably work it into your budget.
How does an installment loan work?
While there are a variety of installment loans available, all of them, except a mortgage, offer similar terms. A person borrows a specific amount of money from a lender for a specified number of months with a set interest rate. Typically, the repayment of the loan is on a schedule of equal monthly installments.
Common types of installment loans
While there are many types of installment loans, three main types applied for most often include a home mortgage, an auto loan and a personal installment loan. In most cases, either a bank or a credit union is the lender.
- Auto loans – An auto loan is a traditional installment loan where the financed amount can only be used for the purchase of a vehicle. Because lenders can use the car as collateral, even those with poor credit can usually become qualified for an auto loan, though they may be charged higher interest rates and may be required to make a down payment.
- Home mortgages – A home mortgage is an installment loan used for the purchase of a home. Terms typically range anywhere from 15 to 30 years. In order to get an approval for this type of loan you must meet certain criteria, which generally include a good credit score, a low debt-to-income ratio and a qualifying income. Since your home is the collateral, falling behind on payments can result in foreclosure.
- Personal loans – A personal installment loan is one that’s provided without a specific use for the money. Personal loans may be secured (requiring collateral) or unsecured, and funds from personal loans are often used for multiple purposes, including consolidating your outstanding credit card debt, funding a vacation, or covering an unexpected expense.
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We understand the time-sensitivity of financial situations, which is why our representatives can contact you with a final loan offer as soon as half an hour after applying. The difference between Western Shamrock and other loan lenders is that we are dedicated to helping you, which is why we assess applicants based on their debt-to-income ratio in addition to credit history. Borrowers can make payments in person in the form of cash, checks, money orders, or debit cards at a local branch. Contact us to find out how Western Shamrock can help fund your next installation or meet your payment deadlines.
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Traditional installment loans, are based on predictable, stable information that you will easily understand. There are no surprises. Western Shamrock traditional installment loan provides:
- Fixed monthly payments
- Fixed repayment terms
Fixed payments and repayment terms mean you know exactly what to expect. We’ll help you set up affordable monthly payments that fit your budget. Plus, your Western Shamrock installment loan can help you build your credit rating.
Personal installment loans
Personal installment loans can be secured or unsecured and come in varying amounts. Lenders will determine a figure and approve qualifying applicants based on their income and credit score.
Installment loan advantages
Installment loans allow people to purchase goods and services that they may need or want immediately when they may not immediately have all the funds required to cover the total cost of those goods or services. By splitting a large total cost over several payments, the cost is more manageable..
- Manageable payments – A traditional installment loan comes with a set number of scheduled monthly installments, usually equal in value. This lets you plan ahead and work them into your monthly budget to meet the loan repayment requirements.
- Credit reporting – Personal installment loans can help to improve credit scores when payments are made in full and on time. Lenders typically report payment history to the three major credit bureaus but check with your lender first to be sure.
- Use for any purpose – Unlike a mortgage or an auto loan, a personal loan has no specified use. You can use the money from this type of installment loan for personal needs.
- Often available to borrowers with poor or no credit – Because personal installment loans can be offered in amounts smaller than loans needed to finance a car or home, they can be easier to obtain for those with less than perfect credit.
Important considerations regarding installment loans:
While a traditional personal installment loan can give you access to cash to use at your discretion, you should never borrow more than you can afford to repay. Borrowing money without a means to pay it back can quickly become a debt problem when late or missed payments add penalty fees to your balance and you continue to accrue interest on your loan.
- Loan amount – Personal installment loan offers can range from a few hundred dollars up to $100,000 or more depending on the lender, your credit score, and your ability to repay.
- Rate – The rate of interest on a traditional installment loan can vary depending on your credit score and other determining factors.
- Term – The duration of a personal installment loan can range from a few months up to 7 years depending on the amount you borrow and the amount of the monthly payments.
A variety of banks, credit unions, and other lenders offer installment loans online or at branch locations to people with good and bad credit. Their interest rates vary depending on your credit score and ability to repay.
Factors to consider:
- Application process – The application process is relatively simple and you can generally complete it at a local branch or online in just a few minutes. Most lenders require some general contact information, proof of income and a valid checking account. Some lenders may obtain a copy of your credit report, while others might only consider your debt-to-income ratio.
- Delivery of funds – In most cases, you’ll receive the funds via direct deposit into your checking account. Depending on the installment loan lender, the process can take a day or several days to complete before you receive the funds. Some lenders offer same-day delivery of funds.
- Accepted forms of repayment – Depending on your loan servicer, acceptable payments for personal installment loans may be in the form of cash, check or by debit card at the local branch, or either by check or debit card online. Other lenders can also service over the phone.
- Customer service – When searching for an installment loan lender make sure to find one that has a proven track record of excellent customer service, attention to care and fostering the relationship. This will ensure that should you have any questions during the process, you’ll get the assistance you deserve.
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