Are you in need of emergency cash? You are not alone; many Americans encounter short term financial crisis at one point or the other. If your expenses exceed your income and you do not have considerable money to cover uninvited expenditures, you can take on a debt. Many people who lack savings account and emergency funds depend on credit cards to pay for medical emergency in the family, car repairs, major home repairs, fund education, utility bills, consolidate other debts, etc. Credit cards, although useful and widely accepted, they are not the safest choice. There are better alternative financing options available. One such fast funding choice that works in the best of your interest is an installment loan.
What are Installment Loans?
These are basically closed-end type of credit or cash advance; meaning, there is a pre-determined monthly payment system. Hence, these are also popular as monthly installment loans. The lender disburses the loan money all at once that is to be paid off along with the interest in fixed equal installments, as agreed in the loan document. These are broadly classified as secured loans and unsecured loans based on the requirement of collateral. Secured installment loan involves pledging of your assets to guarantee the loan repayment; whereas, an unsecured installment loan is independent of collateral. The loan can be obtained either from online lenders or storefront lenders, making it accessible to all kinds of borrowers. The best examples are mortgages, student loans, personal loans, car title loans, etc.
Benefits of Choosing Online Installment Loans Over Credit Cards
- Unlike credit cards that are loosely structured, installment loans have a properly established loan term with both start and end dates
- Compared to credit cards, these cash loans come with lower and fixed interest rates. The interest rates on credit cards may vary in case you exceed the credit limit
- The loan amount is set and thus there is no chance of reckless spending. In case, you want more money you have to reapply through a separate loan application, which may not work out in your favor always. Such a challenge keeps you from falling into debt trap
- Payments are not only flexible but predictable too. They remain the same throughout the tenure, and hence you know exactly how much to pay each month. Whereas, the credit card repayments fluctuate depending on the balance
- Small installment loans are not that damaging to your credit score than a credit card with a high balance. Because credit cards, being a revolving form of credit, are generally assessed for credit utilization that is the ratio of your balance to credit limit. This defines how responsible you are with your revolving credit management.
Financial experts recommend using installment loans online. According to some financial advisers, these are the best alternatives to credit cards. They acknowledge that the former can be used to pay off credit cards even, helping you save more money. Besides, when you apply to online loans direct lender, you get the funds fast. The process is simple; eligibility criteria is easy to meet; the approval rate is high; borrowers with bad credit are also accepted; no collateral requirements; loan approval is instant; direct deposit of cash in your account within hours, etc. However, it is suggested to weigh up your choice carefully and understand the pros and cons for a smarter loan decision.