Sarah Ross, financial adviser and co-founder of CocoLoan, said that “Installment loans are one of the most popular types of loans, and they have a lot of benefits that make them more popular than other loans. Borrowers are able to arrange the repayments as per their budget and schedule. However, in spite of the popularity of installment loans, there are several drawbacks associated with them.” The drawbacks include the following:
- Difficulty in arranging payments: Many times, borrowers have to face a lot of difficulty in arranging the payments within the specified time period. In such a scenario, the borrower may end up paying more interest on the loan.
- The loan amount is not always available: Installment loans are usually available in a limited amount. The amount of money that can be borrowed is usually up to $25,000.
- Higher interest rates: Installment loans charge higher interest rates than other types of loans.
Why choose an installment loan rather than a payday loan or a personal loan?
Now you can get installment loans that are safer and better than payday loans or personal loans. Why? Because they are one of the best options to help you get out of the debt hole and start repaying your loans responsibly.
Loans that are repaid in installments are safer than payday loans or personal loans, because the risk of getting deeper into debt with installment loans is much lower. With installment loans, you repay a set amount of money in regular installments that are smaller than the total loan amount.
Your monthly payments are also lower than what your regular payments would be with a payday loan or a personal loan. This makes installment loans a decent option for people who have trouble managing their finances.
Payday loans and personal loans are also available at banks and lending companies, but they are not the same as installment loans. Installment loans require regular repayments and a set amount of money to be borrowed and often carry higher interest rates than other types of loans.
Payday loans and personal loans are available in small amounts and are given to borrowers without any security. The advantage of installment loans is that you can pay the loan back over time without needing to worry about where you will get the money. This can be important if you have a low income or if you only have one income source.