Short term and long term installment loans – When you apply, you can choose to borrow over a short term such as 1,3 or 6 months or you may prefer to borrow for long-term over 1,3 or 5 years. This may depend on your loan requirements and what you are using the finance for.
For an emergency purpose such as a medical bill, household repair or for paying rent, you find that just a few months will suffice. Otherwise, for something like debt consolidation, starting a business or paying college tuition, a long term option may be better suited. Either way, you always have the option to repay the loan early if you wish and you will often save money on the overall interest.
Unsecured – This is where your loan is not secured against physical or valuable such as a house or car. Instead, your eligibility is based on your income, credit score and affordability for a loan. If you cannot repay, you will be charged late fees and your credit score will be negatively affected, but your home or any other items will not be repossessed.
Secured – This is a loan which is connected to a valuable item such as your home, apartment, car, van or bike – and the amount you can borrow will depend on the value of your collateral or asset. The rates for this can be very low, since you are bartering with something valuable, however, if you cannot meet the repayments, your item or collateral may be repossessed or sold off in order to cover your debts.
Your repayments are typically made in equal monthly installments, so you know exactly how much you will be repaying each month and that amount will not change. So if you are paying back $300 each month for a loan of 12 months, then it is a pretty straightforward process.
You will always have the option to repay early if you want to, whether it is to clear your account in part or in-full and this can be a useful way if you are looking to save money on interest, since less interest will therefore be accruing overall. To repay early, simply call up or email your lender and or log into their online portal to make full payment.
If you miss any payments, you will be able to speak to the lender and maybe ask for an extension, however, late fees will usually apply and falling behind on repayments could negatively impact your credit score.