If you ever applied for a loan but were rejected, you are not alone. There are a lot of people that have experienced the same issue. Among people that get loans, a greater percentage is ignorantly cheated because they never knew how to mitigate the high-interest rate at the first place. But, be happy. You’re about to read everything you need so that you don’t end up in a bad situation. Let us get started. Before Taking an Installment Loan Online There are different types of loans to take and all fall into two categories: Installment and credit card loans. An installment loan is the best choice if you are searching for a loan to make a specific purchase. Don’t seek credit cash advances. There will be a much more detailed explanation on this issue later. Learn more on installment loans online with Achieve Finance What is an Installment Loan? An installment loan is a loan of a specific amount of money expected to be paid with a defined interest over a series of fixed monthly payments. It is the most popular and currently the safest type of loan. There are several types of installment loans. Seek the one that meets your needs. Here are four common types of installment loans:
How is the interest rate determined? The interest rate is a crucial issue to consider before taking out an installment loan. Everyone wants low-interest rates because it is better and much easier to repay them. However, banks use a specific formula to calculate the interest rate of a loan. This is the formula most banks use: Interest rate on an installment loan = 2 X Annual # of payments X Interest/ (Total no. of payments + 1) X Principal For example, if you seek a loan of $5000 with an interest of $400 and you are expected to complete your payment in 12 months. This is how the interest rate is calculated. Interest rate/installment loan = 2 X 12 X $400/ (12X1) X $5,000 = 14.76 percent The interest rate on this installment loan is 14.76 per cent. What is interesting is that you can reduce the latter! How to Reduce the Interest Rate on an Installment Loan? Use the following tips to reduce the interest rate on your installment loan.
Why an installment loan is better than a credit card loan? When you are planning to get a loan to make a specific purchase –like a car loan, a student loan, or any specific purchase-, an installment loan is the right option for you to start your mission. It is a closed-end credit option whilst a credit card loan, is an open-end credit option that revolves as you are prone to use it repeatedly. Credit card cash advances are bad for you because:
Is An Installment Loan safe? Everything in life is like a coin. There is always a good side and a bad side. An installment loan offers monthly payments but at a higher interest rate. A fee is paid to open the loan. There are penalties if you do not meet your monthly payments. Consider these issues, and make an educated decision. Conclusion By now, you should have understood how an installment loan works and how it compares with other borrowing options. You can also check the link below to get some loan basics about the latters as keeping yourself informed is a must.
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