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The Truth About Installment Loans
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If you’re looking to borrow money, chances are you’ve come across plenty of places willing to offer installment loans for small amounts of money at high interest rates. These types of loans can be awful for your finances. Even though it may seem like these are the only loans you can find, you do have other options.
Small, High Interest Rate Installment Loans Aren’t a Great Option
Small loans with high interest rates are a popular product for both local and online lenders. These types of loans are often offered as a short term solution for a financial bind. Unfortunately, high interest rate loans for small amounts of money are almost never the best solution for your financial needs. However, they’re often a great deal for the lenders loaning you the money.
These loans usually don’t help you solve your financial problems. Unless you’re just having a small one time issue, chances are the loan will come due before you’ve been able to get back on your feet. Then, you’ll need to take out another small, high interest rate installment loan to pay off the first. This is a vicious cycle that can continue through multiple loans and often ends up with you paying a lot of interest for the small amount of money you borrowed up front. Some states have even passed laws that limit the interest rates and other terms of these types of installment loans due to their potentially predatory nature.
With just a bit of work, you should be able to find a lower interest rate loan and, if needed, a loan with a longer repayment period. The key is knowing where to look for the loan you need.
Another Option for Your Borrowing Needs
Instead of opting for a small installment loan with a high interest rate, you should seriously look into legitimate personal loan programs. Personal loan programs are usually offered by local banks and credit unions as well as by legitimate online lenders. You may be able to find these loans at local lending storefronts, but you need to carefully look and compare these programs as many just offer high interest rate loans.
Most personal loans don’t even require any collateral and only require a signature. Due to this, these personal loans are sometimes called signature loans. Legitimate personal loans can usually be repaid over years, not just a few weeks or months. The longer loan term and potential larger amount borrowed give you more time and resources to get your financial footing. Additionally, interest rates are usually more reasonable, with some programs offering rates as low as 5.99% APR.
Find the Best Personal Loan for Your Situation
If you have determined a personal loan is likely a better option than a small installment loan with a high interest rate, you need to make sure you find the best personal loan for your situation. Personal loan terms can vary widely from lender to lender which means it pays to shop around. If you can find a lender that offers a better interest rate or other terms, you could save a significant amount of money over the life of the loan.
You can physically go to your local banks and credit unions to shop for loans or you could get multiple personal loan offers with just one easy application on LendingTree.com. Many times online lenders may have better rates because they don’t have to deal with many of the overhead costs, such as rent, that your local banks and credit unions have to pay to do business. Ideally, you should compare your online offers to your local banks and credit unions then pick the best loan for your situation.