Each person strives to meet their needs as much as possible and to surround themselves with all the good practical things. This applies to both repairs and purchases. But not everyone can afford to upgrade their wardrobe or buy a new phone for cash. This is what installment loans are invented for. They are designed to make our lives easier and allow us to buy a little more than we can currently afford.
Let’s look at the overview of loans. A loan is targeted financing from a bank for the purchase of a particular product using funds borrowed at a certain interest rate and for a specified period. That is, the bank pays your entire purchase and you hand over the money to it, taking into account the interest rate set when you signed the loan contract.
What are installment loans? The concept of an installment loan is somewhat different – it is a method of purchase in which the store offers the buyer the opportunity to pay for the goods in equal installments, without additional payments for several months. That is, the store, in order to increase the demand for its goods, allows the buyer to pay off the debt for the goods in small parts.
What are considered installment loans?
It is the transfer of property or money by the lender to the borrower for free use. The basis of the procedure is a legal agreement which prescribes the rights and obligations of the parties and guarantees compliance with the prescribed conditions. Unlike the essentially similar storage agreement, the loan services offer the right to use the thing or money received on condition that it is returned in the quality and quantity received.
Basic conditions of installment loans: what are they:
- The object of the contract can only be a product, a service or a certain type of work;
- The purchase price is divided into several installments and cannot exceed the price of the product;
- There is no cash compensation in the form of regular interest charges;
- The buyer is forced to pay a deposit;
- The transaction is completed within half an hour due to the minimum requirements for customers who applied online;
- The duration of the contract does not generally exceed one year, but it sometimes reaches 18 months;
- The frequency of payments to repay the debt can be a week or a month.
The main rule is to always make a contribution on time. Otherwise you will have to pay late fees which is not very pleasant and very expensive. The late charge is calculated as a percentage of the amount of the late executed monetary obligation and is levied for each day of late payment.
Types of installment loans: what are they?
There are two main types of payments: interest free and interest. The first option is more profitable for the buyer due to the absence of commissions and mark-ups. You can submit an application directly on the website or in the store’s sales area. If the transaction is done through a bank, the financial institution may charge additional service charges. The installment plan option is available at many banking institutions that have extensive networks of partner stores.
Building a credit history begins with signing the first loan or loan agreement, purchasing in installments or opening a credit card. Sometimes a lack of credit history is worse than an installment loan for bad credit because in such a situation the bank has no idea about the customer’s financial situation. How to get good credit in just a few steps:
- All obligations must be paid on time.
- You need to keep track of your history regularly, and not just when it’s time to take out a new loan.
- Don’t be anonymous. You can use small property loans or get a credit card.
If the customer has forgotten the due date of the debt or has taken out a cash loan, which cannot be repaid, it should be remembered that a bad credit history is not a penalty. Anyone can improve their creditworthiness at any time, and if you need the extra cash now, remember that there are non-bank organizations in the market that are ready to give installment loans for bad. credit history.