What Are Installment Loans and How Are They Right for You?

If you’re looking for a quick and easy financial solution for any number of reasons, an installment loan might just be the answer. The term has been thrown around for many years, and over time it’s just become a general term for personal and commercial loans. One thing that hasn’t changed is that it’s an incredible tool in your personal finance arsenal when used effectively. Read on to learn how installment loans in Bessemer, AL, work and if it’s the right kind of loan for you.

How Does an Installment Loan Work?

Installment loans are convenient in the sense that you immediately receive the money you’re borrowing or the item you’re purchasing. You pay it off, with interest, of course, in regularly scheduled payments known as installments. Such installments can be in a small amount for you to pay for religiously. However, it would usually take a long time before you can finish paying the amount you borrowed. Usually, it takes a couple of years to complete it. Once you’re able to ultimately pay off your loan in full, the account is closed permanently.

Some installment loans require the borrower to hand over something of value as collateral for the money borrowed until you finish the last regular payment.

Examples of Installment Loans

As mentioned above, installment loans are more of an umbrella term to various loan products with one thing in common: the way you pay off the loan in installments. Some of the more common examples of installment loans are:

Personal Loans

These are basically loans you can use for almost any reason. Whether you want to make a big purchase, pay off some bills, invest in a new business, or you just want to have additional cash on hand, personal loans are there for you to use. Loan amounts can vary between $1,000 to $100,000, and repayment terms are typically two to seven years. Of course, all of that depends on the lender.

Personal loans can be secured or unsecured, which just means that the former requires collateral while the latter does not. Unsecured loans are much more common, but lenders who offer them usually have stricter requirements than secured loans.

Home Loans

You’ve probably heard of a mortgage before, right? Home loans or mortgages let you borrow the value of your home and agree to repay it with interest in monthly increments, typically over 15 or 30 years. This is a type of secured installment loan where the property you bought acts as collateral. If you miss too many payments, you actually risk losing your house. Like any other secured loan, you should make sure not to miss any payments if you don’t want to lose your house.

Auto Loans

Auto loans are also a type of secured installment loan. The only difference is the vehicle you purchased will now act as collateral. It works the same way as a mortgage in the sense that you borrow the cost of the car you’re planning to buy. You’ll also pay off the loan in regular installments plus interest over a period of two to six years on average. Like a home loan, the lender has the right to repossess the collateral, which in this case is your vehicle.

Conclusion

These are just a few of the examples of installment loans available in the market today. Of course, there are a lot more other types out there that might suit your needs, like student loans and buy-now, pay-later loans. Nevertheless, installment loans are a quick and easy way to get some cash whenever you need it.

Bessemer Finance is one of the most established names in finance located in the heart of downtown Bessemer across from the historic Bright Star restaurant. We’ve been helping clients for more than half a century with our convenient loan products. If you’re looking for a hassle-free way to apply for installment loans in Bessemer, AL, we are the ones to call. Contact us today to learn more about our loan products.

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