Whether you want to borrow an installment loan from Micro Payday Loans or you already did so, you probably had to look up information beforehand. Nevertheless, are you aware of the advantages and disadvantages that come with this type of loan? Everything comes with downsides and installment loans are no exception to that rule.
So, if you want to know what you’re signing up for when applying for installment loans, here are the pros and cons they come with:
Pros
- Availability
One of the things that make installment loans so great is the fact that they are always there for you. In other words, whenever you’re in desperate need of money, you can borrow an installment loan and get rid of your problems.
However, you need to qualify for that installment loam; so, you have to meet certain requirements.
- Your Bad Credit Doesn’t Affect You
The thought of a bad credit rating is terrifying for people who need financial helpbecause they are afraid it may be an obstacle between them and the loan. It becomes even scarier when you see that the credit score is one requirement for obtaining a loan.
Thankfully, with installment loans, this worry is gone. You are able to take one even with a bad credit. There are a lot of financial companies that offer the best installment loans for bad credit, so you can breathe in relief. This is what makes it so usefulbecause most of the other loans don’t give you this privilege.
- Easy to Manage
Another thing on the advantage list is the fact that an installment loan is easy to manage. Basically, you can break down the bigger amount into smaller manageable installments that you are going to pay every month. This makes it very convenient for those who struggle with their finances.
- Small Interest
If you decide to pay in small installments, the interest will also be small. Still, you can divert the major portion of your savings to a money market or fixed income instrument on a monthly basis. As a result, it will have a bigger rate of return in the long run. This means you will earn more than you spend on interests.
Cons
- Prepayment May Not Be Allowed
If you want to pay off the loan earlier, that may not be an option. Some lenders charge a penalty for pre-closure, thus wanting you to pay the dues as per the predetermined terms.
- Stringent Checks
Some lenders may carry out stringent checks of your income certificates, debt-to-income ratio, credit score, and many others. Therefore, the amount of checking is much higher compared to that of short-term loans.
Final Thoughts
Knowledge is mandatory before doing anything, which is why you should know all the details related to installment loans. As you were able to see, they come with advantages and disadvantages. You can compare them and see if this type of loan is suitable for you or not.
