An installment loan is perhaps the most traditional type of personal loan. Its structure is simple and doesn’t come with hidden catches or fees. If you or someone you know is considering applying for an installment loans san antonio, tx, here’s what you need to know.
What is an installment loan?
When most people hear the term “loan” they probably think of a traditional installment loan. Simply put, an installment loan is a loan where funds are extended from a lender to a borrower, which are paid back in equal monthly installments. Those monthly payments include a portion of the amount borrowed (the principle) and the lender’s fee (the interest). The loan lasts for an amount of time agreed upon during the application and approval process (term.)
Is an Installment loan different from a payday loan?
Payday, or title, loans are short term loans that require a vehicle’s title or a future paycheck as collateral and are expected to be paid back quickly. Borrowers who take out payday loans are often subjected to higher interest rates, and the lenders generally don’t report to credit agencies.
With a traditional installment loan, borrowers can expect a longer term and a lower interest rate. Lenders report to credit agencies, which can help establish or rebuild a borrower’s credit.
What do I need to apply?
You must be able to provide some standard proof of identity and income to apply for an installment loan. This includes a license or legal ID that shows you are over 18 years of age, a social security number, proof of residence, and proof of income.
An installment loan lender will evaluate your income and determine how much you can borrow based on your ability to pay.
What happens during and after the loan?
During the term of the loan, you will be expected to make monthly payments on time. There is no penalty for paying off the loan early. Once you’ve made your last monthly payment, nothing more is owed, and you are free to apply to borrow again.