When you’re going through financial hardship, an installment loan may be the superhero you’ve been waiting for. With low interest rates and payments, it seems like the best deal when you are struggling to cut off expenses.
Still, every loan comes with a price, which is why you should be aware of what they bring to the table. Is an installment loan right for you? Let’s find out!
- Your Credit Rating Is Good
If you are the happy owner of a good credit score, then you already have an advantage. People with good credit scores usually receive better interest rates than those who have a bad one. Therefore, it indicates that you have a better chance to secure the funds you need for a less severe repayment cost.
If you have a good credit, you probably worked hard for it, so losing that would be a shame. Whereas other loans may damage it, installment loans actually help build your credit. Whenever you make a payment, your credit rating smiles.
- You Don’t Have a Job
Many people have the mindset that you must have a job in order to be qualified for a loan. However, this is wrong. If you have any form of recurring income, you can successfully apply for an installment loan and obtain it. Pension, security payments or other forms of income still count as income.
However, you need to provide proof that you actually have an income, as they want to make sure you have ways to repay the loan.
- You Need to Make a Large Purchase
Large purchases are not so easy, and you may want to already have just the right amount of money stored. If you don’t, an installment loan may come to your aid.
Many people can’t immediately purchase a new house or car, so they seek the help of installment loans. Even though the amounts, loan terms, and interest rates vary, this type of loans is usually used for large purchases.
- You’re Looking for Ways to Build Credit
Some people think that you must have credit in order to obtain a loan. However, the credit score is not the decisive factor when a lender decides to give you cash.
Loans are some of the easiest ways to increase your bad credit, and there are even bad credit installment loans that are made for very large purchases. If you make your payments on time, your credit score grows. Consequently, you build a good credit rating.
- You Don’t Want to Ruin Your Finances
Certain situations happen unexpectedly, and they require money in order to be solved. For instance, medical emergencies or car malfunctions are situations that may require a huge amount of cash. If you use your money, you will damage your finances.
Thankfully, installment loans are the solution – you get the amount of money you need, and repay it in small amounts over time, to take care of your problems. Moreover, even though you have to repay it, an installment loan can remove some of the financial struggles.
So, if you were looking for reasons to apply for an installment loan, now you have them. After reading this article, you can tell whether installment loans are good for you or not.
Rachel Slifka is a freelance writer and human resources professional. She is passionate about helping fellow millennials find success with their finances and careers. Read more by checking out her website at RachelSlifka.com.