In a nutshell, installment loans are short-term loans that are paid back over time. These types of loans are popular among people who want to borrow money without having to pay high interest rates. Installment loans are often easier to get than traditional bank loans, and they may even have lower interest rates. However, these loans do carry some risks.
The first thing you should know about installment loans is that they are not regulated by any federal agency. So, if you default on them, you won’t face any legal consequences.
Second, installment loans are considered unsecured debts. That means that the lender does not receive collateral for the loan. If you don’t repay the loan, the lender can take your car or house.
Third, installment loans are designed to help you meet your financial obligations. But they aren’t meant to be long term solutions to your debt problems. You need to make sure that you use the funds wisely.
Types of Installment Loans
Mortgage Loans
Mortgage loans are the largest class of installment loans offered by Tower Loan. Mortgage loans are secured by real property and allow consumers to purchase a home. Mortgage loans are often referred to as “home equity” loans because they are backed by the value of a borrower’s home. Home equity loans are typically used to finance major purchases, like buying a car or a house, or to consolidate debts.
Auto Loans
Auto loans are another popular kind of online installment loan. An auto loan is a secured loan that provides financing for a vehicle. Auto loans are generally used to buy cars or trucks. Consumers can use their vehicles as collateral if they have good credit history.
Personal Loans
Personal loans are unsecured loans that provide financing for personal expenses. Personal loans are not tied to any asset and are considered non-collateralized loans. Typically, these loans are used to cover unexpected expenses, pay off existing debt, or make improvements to homes or vehicles.
Other Types of Installment Loans
Other types of installment loans include student loans, business loans, and small business loans.
Finally, installment loans are only appropriate for certain situations. For example, if you’re looking to buy a home or go on vacation, then an installment loan might work well for you. However, if you’re trying to consolidate credit card bills, then a personal loan would probably be a better option.