An installment loan is also known as a signature loan, deferred payment loan, or an installment agreement. An installment loan is a kind of contract or agreement between a borrower who takes out a loan and a lender who then lend funds to the borrower.

Usually the term of such loan can be up to time needed for the borrower. In exchange for the money borrowed from the lender, the borrower promises to repay it as per the terms and conditions of the lender once the amount has been repaid.

These loans can be used for a number of purposes like making home improvements, purchasing expensive cars or other expensive items, paying off credit card debt or any other unsecured debts and even to make some instant cash.

Advantages of installment loans.

There are many advantages of using these kinds of loans.

The main advantage of these loans is that they provide the borrower with almost instant cash which he can use in any way he wants. This is mainly because the rates of interest on this kind of loan are very low which make them ideal for the borrowers who don’t have much money in their hand or those who want to get rid of debts as soon as possible.

Another advantage is that these installments do not have to be repaid in a lump sum as the repayment term is usually long enough for the borrower to pay the debt along with an extra amount that is waived off. Other benefits of these loans are that they offer lower interest rates and longer payment terms which make them perfect for people who don’t have a lot of money to offer as collateral.

Disadvantages of an installment loan.

The disadvantages of an installment loan are relatively few.

One disadvantage is that the longer the period of loan is, the higher the monthly installments become. Also, the longer the time you take to pay the installments, the more you will be paying over time. Therefore, these loans can be used only for an immediate financial requirement.

So, when it comes to deciding whether to opt for an installment loan or a payday loan, you will have to weigh the pros and cons and then take your decision accordingly.

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