An installment loan consists of once singular borrow before repaying the loan according to a schedule. The most common installment loans are for mortgages and auto loans. Generally, a payment would be calculated with the use of a loan balance and an interest rate and also the time in which you have to repay the funds.
Essentially, not all installment loans are the same. This makes shopping around for the best possible installment loan a crucial process. However, it does not have to be rocket science. Here are a few tips to getting the best deal on an installment loan.
Exploring the Terms
Every loan will have varying terms. This can include how many payments will be made and just how they will be calculated. While you are exploring each set of terms for various installment loans, be sure to view the amount of interest that will be paid on each payment.
Additionally, how much of the actual principal being paid is a major indicator of a good or bad installment loan deal as well. The higher the interest loan, the higher the payment will be. The majority of that goes towards the accumulative interest which makes paying off your principal take much longer.
Reviewing Interest Rates
It is important to compare interest rates with a handful of installment loan agencies before signing anything. Your ultimate goal is to locate the lowest possible annual percentage rate or APR. You should be seeking out an installment loan with an APR that is fixed.
The only time that fluctuating interest rates can prove beneficial is when they may go down from time to time. Though fixed interest rates have a few drawbacks as well, as interest rates of other companies may get higher, those of a fixed annual percentage rate will remain steadily the same.
Calculating the Repayment Amount
Due to all of the variations in lenders and their interest rates and repayment schedules, the same sum can be borrowed from many different lenders all requiring you to repay a vastly different total. Generally, this is due to fees that are associated with each lender and their varying interest rates.
Do your research to find a loan with a minimal fee for repayment. Remember to calculate repayment totals with several lenders prior to agreeing to an installment loan. Though the research you do will provide very elementary estimates, they can offer a sound idea of what to expect in terms of repayment.
1 comment
It’s good to know that not all installment loans are the same. I will make sure to shop around and pick one with an APR that is fixed, like you said. Thanks for your advice on installment loans!