Instead of providing you with a line of credit that can be used repeatedly (like you can with credit cards), an installment loan provides you with a sum of cash that is paid off over a number of years. They do provide a more desirable approach to lending which makes them an appealing option for many.
How Installment Loans Work
With these types of loans, you can make monthly payments over the term of your loan in exchange for a certain amount of money that the lender provided you with during your time of need. The interest rate is also locked in for the term of the loan so that you’re not subject to changes in the market.
Keep in mind that it will take a little time for approval (no longer than two weeks usually) and you will need a good credit history to obtain the best interest rates and best terms.
The Advantages of an Installment Loan
What makes this a feasible option for business, both small and large? We’ll let the benefits speak for themselves on this one.
· A longer amount of time to repay the loan provides lower payments.
This also means you’ll accrue more interest, but the lower payments are sure to make up for it in the long run. Especially when you want to make sure that your monthly payments don’t limit the amount of potential your business has to become even stronger.
· Fixed interest rates allow you to plan for it financially each month.
Keep in mind that you will have to make sure the installment loan you have taken on is one that locks in the interest rate for its entire life. You don’t want to risk having it fluctuate on you and causing things to be more difficult than they have to be.
· Installment loans tend to be more flexible making way for less paperwork.
This also means that approval can come along a lot quicker too. By eliminating the need for a huge pile of paperwork, you’re also taking on a more simple and direct approach than other types of business loans may be able to provide.
If you need a predictable loan that you know what you’re going to be paying on a month-to-month basis, this is definitely one of the options that stand out like a sore thumb.