With So Many Different Types of Loans, Which One Is Right for You?
The number of different loan types that are out there seems endless. Your personal credit score and the reason why you need a loan are two important factors in determining which type will be best for you. Let’s take a look at one popular option, which is the secured installment loan.
All about the Secured Installment Loan
These types of loans tend to be long term loans that are used for expensive things. You will be borrowed money that you pay back over a period ranging from 3 to thirty years. Every month, you will make an installment payment and this amount will generally stay the same for the duration of your loan. Sometimes, your first and/or final installment will be slightly higher than the others.
Each month on a set date, the payment will come out of your account. By the end of the term of the loan, you will have paid back the principal and the interest. Sometimes, however, you will only pay installments that cover the interest on your loan. At the end of the term, you will have to make what is known as a ‘balloon payment’, which means you pay all of the loan principal back.
Balloon payments tend to be bad ideas. Interestingly, these types of loans are usually provided on home purchases. This means that the final balloon payment is not a few hundred bucks, but rather hundreds of thousands of dollars.
There are also unsecured installment loans. If you want to approach a bank for these, you will have to have outstanding credit in order to be eligible. For people with bad credit, these loans tend to be available but only with incredibly high interest rates. By increasing the interest, the lender will have a bigger chance of recouping at least the loan principal. After that, any money they collect from you in interest is profit.
There are many different types of installment loans, some of which are more short term. These tend to be more suitable for people with bad credit as well. If you’re interested in installment loans, 123CashDepot.com provides plenty of options. It is an opportunity for you to take a look at the different loan constructions that exist, thereby helping you choose the one that is most suitable to your personal needs.
Taking out any type of financial product is a decision not to be taken lightly. If you currently have bad credit, it means that you have experienced financial difficulties in the past, something that you must also take some responsibility for at the very least. If, however, you feel you have overcome this, and you are ready to be a responsible lender, then now might be the time to start looking at a loan. Whether it is to pay for that dream vacation in Cuba or for your father’s heart surgery is irrelevant, as most of these types of lenders don’t want to know how it is being spent.