What are the Best Uses for Installment Loans?
There is no denying that the current financial environment is challenging for people with credit issues. The good news is installment loans are helping make funds more available when the need is high and the cash is low. Installment loans refer to the money lending service where you repay the amount borrowed over a specific amount of time, which may differ from three months to thirty years depending on the loan.
Unlike payday loans, which are paid in a single lump sum with high interest rate over a shorter period of time, installment loans are evenly spread throughout the term of the loan. This makes this type of lending service ideal for a lot of people since having regular payments in a period of time is easier to manage in terms of budgeting.
What are installment loans used for?
As with many things, however, there is a way to use this financial tool so that it works to your advantage. Here are different uses of installment loans and how you can maximize it to your benefit.
Funding a Vacation
Whether you opt for an affordable or a nice indulgent getaway, there is no denying the fact that there is a price to pay for giving yourself and others a treat. Most people cannot afford the big cut it takes out of the monthly pay checks. The good news is, there is a way to incrementally pay for the cost if the funds are not readily available.
Installment loans are quick and convenient way of acquiring the needed funds with an easy and affordable payment plan. When going out on a vacation, the last thing you need is to stress out on the process of getting funds. In addition, paying it off with fixed schedule allows you to fit it in your budget perfectly.
To maximize your installment loan, planning your vacation ahead of time is the best way to go. Knowing where the destination is and the potential costs involved informs the amount of money you need to fund this vacation for. This way you can borrow just the right amount as well as anticipate how much to allocate for payments in the coming months.
Buying a Gift
Sometimes you need to buy gifts in short notice and not have funds readily available for it. You may also have a very special event coming but the money is a bit tight with other expenses that need more urgent attention. Using an installment loan to pay for this purchase is a smart way to use money that is not there at the moment.
What you can do to maximize this opportunity is to look for potential gift items to buy with a budget in mind. This way, you can look for bargains or cheaper but high-quality alternatives. You will be surprised by the amount of money you will save just by taking your time to look at different stores and products out in the market.
Home Improvement Project
It is an exciting time for homeowners to make improvements but it always costs money. If you live in a limited-income household, chances are you do not make enough each month to cover for the expenses at once.
Applying for installment loans for a home improvement project is a wise way to cover the expenses without slashing a huge chunk of money from your paycheck. Repayment schemes are within your control and, if you stay wise with your budgeting, will cost you almost nothing.
Start a Business
Another exciting achievement for the entrepreneurial types is starting a business. It is a wise decision not to use all of your savings on a business as a huge chunk of your money should be reserved for emergencies and other unforeseen events.
If you are business oriented, surely you know that applying for an installment loan is not a bad idea. It is a great way to get the ball rolling on your business start-up as you incrementally repay the loan. It doesn’t take a huge blow on your budget, plus the scheduled repayment plan allows predictability in the amount of money that comes out.
Pay Off Debt in Full
Some types of debt incur a huge amount of interest that applying for an installment loan to pay it full makes a lot of sense. The difference is that while, technically, you are still in debt, installment loans allow you to incrementally pay off the loan without amassing a huge sum of interest in the process.
With the monthly payments, you know just how much you will be paying. This means you can anticipate the monthly bills and make wiser financial decisions. If you keep up to your payments, the loan will cost almost nothing compared to some form of debts.
Take this financial aid to your advantage by consulting with a financial adviser. If you have a big amount of debt to pay, it is best to make the computations ahead of time and see the difference it makes if you apply for an installment loan and pay for it instead.
Medical Emergency
It is unfortunate to go through a medical emergency especially if the funds are not available. When this happens, an installment loan is a very good way to get financial support. The nature of the loan processing and the immediate release of funds will benefit those that are in need of money due to a medical emergency. At the same time, payment methods are easy to monitor so you can stay on top of your finances despite these hard times.
In addition, the money you get out of this loan is accessible to you however you want to use it. Unlike other loans, you are not bound to use the funds strictly for medical or surgical expenses alone. If you need additional funds for transportation or food allowances, you can use the money for that purpose as well.
Unexpected Expense
Life throws us a lot of challenges and when unexpected expenses come, the last thing you want is to add stress to the situation. This is why installment loans are pretty handy when there are unforeseen events that may hurt your monthly budget.
The good thing about installment loans is it puts predictability to an otherwise unpredictable turn of events. When emergencies happen and you have plenty of things on your mind, a set date and the same amount of payments will help big time.
In addition, unexpected expenses usually do not fall under specific categories that other traditional loans are designed for. What if you suddenly need to get your daughter a costume for a school play, but you applied for a car loan? That can be a problem when it comes to reviewing your expenses. The good news is, installment loans allow you spending freedom to use the money however you need it. This is a blessing and a responsibility at the same time, which makes it perfect if you want to take a hold of your finances.
Debt Consolidation
Debt consolidation by moving high-interest debt onto an installment loan reduces your credit utilization ratio big time. This term refers to the amount of your credit card balance in relation to its limit. This ratio is a large factor that determines your credit score. As always, when it comes to credit card debts, it is best to keep using less than 30% of your credit card limit. Using an installment loan to pay off debt instantly helps your overall credit card utilization.
Another advantage to this scheme is that moving balances from high interest credit cards to installment loans with lower annual percentage rate saves you a lot of money. In addition, you pay a stable amount in a set number of days so that it makes your life so much easier by not thinking about your debt too much.
Car Repairs
Car repairs are annoying necessities that can require considerable amount of money. Sometimes, fate has a funny way of doing things whereby car repairs are necessary when there is barely extra money you can spare. When this happens, applying for an installment loan is not a crazy idea.
In addition to having fast and convenient application method, an installment loan saves you from the hassle of going through the bureaucracies of applying loans through other financial institutions. installment loans are easily available online with fast lender-approval and safe and secure processing.
Recap
In conclusion, instalment loans have plenty of benefits. Not a lot of people know that this type of loan exists so they opt for financial schemes with higher interest rates and longer processing times. Indeed, this type of loan could be the answer to your urgent financial needs or the key to your financial independence.
Cary Silverman is a consummate entrepreneur having sold multiple companies during his 20 years of business experience in the financial industry, but for him, it isn’t about the money. His success is rooted in his passion to focus on doing something better today than it was done yesterday. These days, he’s the CEO of Waldo General, Inc. that oversees the operation of King of Kash.