An unexpected emergency expense can be greedy. From illnesses and accidents to an urgent auto repair, these extra bills may take more than your savings have to give.
When your budget is on its last legs, online installment loans are there to pick up the slack. Many people borrow them in their time of need, but how do you know if it’s the right fit for your finances? Check out this quick guide for answers.
What Are Installment Loans?
Online installment loans (OIL) are a kind of closed-end financial product. If you’re approved, you’ll borrow a set amount of money upfront, and you’ll receive it as one lump sum to use as you wish.
Once you borrow this money, your lender gives you a fixed period of time to repay what you owe including fees and interest. During this time, you’ll make monthly fixed payments on a schedule outlined in your contract.
Here, “fixed” means your payments won’t change, so you’ll pay the same amount each month. If you’re still wondering, “how do monthly payments work?” visit here for more details about how you repay installment loans online.
There Are Multiple Kinds of Installment Loans
Mortgages and student loans follow the basic rules outlined above, but they play unique roles in your finances at special times in your life. You only take out a mortgage when you’re buying property, after all.
As for OIL, they’re designed to help with the following situations:
- Small, non-recurring medical or vet bills, like a surprise visit to the clinic or one-time x-ray
- Unanticipated home repairs you can’t avoid, like leaking plumbing or a broken furnace
- Unavoidable and unexpected car trouble that requires costly repairs
- A surprise, one-time spike in utility bills
These expenses have urgency in common. They’re also hard to predict, so they aren’t regular bills that show up in your budget every month.
Why Do People Choose OIL?
They offer a longer period to repay what you owe than other emergency products.
Take the direct lender payday loan as an example. It’s also a closed-end financial product, which means you’ll receive your funds in one lump sum.
Instead of repaying what you owe over multiple installments, direct payday lenders require you to pay back everything all at once — usually by your next payday. This may place a challenging burden on your finances if you don’t budget for it carefully.
How to Find an OIL That Fits
These tips will help you find the best possible option for your needs:
- Check for the lender’s license — it shows they follow state and federal lending laws
- Understand how your rates and terms affect the cost of borrowing
- Compare the true cost to your budget, making sure you can cover each payment while juggling other bills
- Read your terms and conditions to ensure you understand the full list of your responsibilities
Keep these tips in mind whenever you’re borrowing, regardless of the product. Whether it’s an online installment loan or something completely different, they’ll help you find an affordable option that fits your finances.