What Type of Borrower Will an Installment Loan Help?

An installment loan is money borrowed from a lender that must be paid back in regular payments by a set date. The quick turnaround times of installment loans make them appealing to a very specific type of borrower.

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Installment loans require little paperwork, have short processing times, and are given out in lump sums. For these reasons, a borrower that requires money quickly would benefit from an installment loan. 

The interest rate on installment loans is usually fixed. No matter what happens in the market or to an index, the monthly payment owed on an installment loan will be the same. Borrowers who have limited income and who can only afford a certain amount each month do not need to worry about interest rate fluctuations with a fixed rate installment loan. 

Borrowers with fixed assets can use an asset as collateral to negotiate a lower interest rate on an installment loan.  Collateral is only in danger if a borrower defaults on the loan. Because the payment schedule is set and the final pay day is determined before closing, it is easy for a borrower to avoid default and remain in possession of collateral. 


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