Installment loans are a good solution for credit card debt and other credit repair problems. An installment loan is a loan, secured by your home or an equity line of credit.
Because the loan is secured by home or equity, there are fewer requirements for these types of installment loans. You are just looking for a lender that you can trust to return the money to you if you default on the loan. And you will probably get a lower interest rate on an installment loan than you would get on a revolving loan because the time frame on this type of loan is typically longer than a few years.
Disadvantages of an installment loan
There are also disadvantages to the type of loan mentioned above. The rate of interest on an installment loan may be higher than a traditional loan because the installments are generally smaller.
If you have bad credit, it may not be possible to get a traditional loan for your home. The person who has your house will usually agree to an installment loan.
If you have used your home as collateral for a loan, you may have had to pay off on other credit cards. If you are unsure about the situation, you should contact the person you are dealing with. They may be able to arrange a better solution for you.
You do not need a good credit score to get an installment loan
Many lenders offer installment loans to people with bad credit scores. One of the most important things about this type of loan is that you do not need to worry about the credit score. You simply must make your payments on time and the loan will be paid back. If you do not make your monthly payment, your interest rate will increase.
You can also get an installment loan if you want to consolidate other debts. Or you may be trying to repair your credit.
Before deciding to go ahead with a loan, you should first talk to your lender about your financial situation. Some companies require you to have a FICO score of at least 680 before they will issue you a loan. The FICO score is an assessment of your credit rating, that will allow you to see if your loan is worth the risk.
How to get a better interest rate on your installment loan?
If you have a high score, you can expect to get a better interest rate on your installment loan. It is advisable to consult a credit expert before getting a loan to get the best deal possible.
If you do not have a good credit score, you should not automatically assume that your monthly payments will be higher. You can always consult a credit expert about your options and be sure to ask if your monthly payments will be higher.
A traditional loan can offer you great savings over an installment loan. However, you should discuss your options with your financial advisor so that you can determine which one is best for you.