Installment Loans Connecticut
An installment loan is one of the most popular financial services. Such a loan is a simple and convenient financing option that is beneficial for both parties to the transaction. You receive money for your needs, and the bank receives profit in the form of interest.
Any financial service has advantages and disadvantages. Therefore, before taking a loan, it is recommended to understand the pros and cons of a loan. An objective view of lending allows you to fully use the first and minimize the impact of the second.
What is an installment loan?
An installment loan is a lump sum of money that you borrow and repay in payments — or installments — over a period of time, usually months or years. Both business entities and individuals act as recipients. Banking and microfinance organizations become creditors. There are many types of installment loans.
Types of installment loans
The development of banking activities has led to the emergence of a variety of installment loans. Each of them has its own advantages and disadvantages. The most popular and widespread types are given below:
- Personal loan. It is the most popular loan type. Usually, the funds received are spent on a specific purchase of a product or service. Often, the application takes place remotely. The pros of personal loans are speedy application and accessibility. The cons are high interest rates and short lending period;
- Car loan. It is another popular type of installment loan. The borrowed money is used to buy a car. The latter usually acts as collateral, which lowers the risks for the bank and reduces the interest rate for the borrower;
- Mortgage. It involves collateral in the form of real estate – a purchased apartment. Distinctive features of mortgage loans are long terms, large loan amounts, and relatively low interest rates;
- Purpose loan. An example of such a financing option is car loans. Purpose loans are issued for a definite purpose, for example, education or the purchase of a TV set. Favorable lending conditions are achieved through cooperation between the bank and the organization providing the service;
- Business loan. The borrowed funds are used for starting a business or its development. They are divided into several varieties, for example, a commercial mortgage;
- Pawnshop loan. Such loans are simple and fast to access but far from the most profitable financing option. Pawnshop loans are short-term and secured by a property. If you do not repay a loan on time, the creditor has the right to sell the pledged property.
The US financial market is actively developing. As a result, a potential borrower has the opportunity to choose the appropriate financing option.
Pros of an installment loan
The main advantage of cooperation with banks or microfinance organizations is the possibility of obtaining funds that can be spent on various needs of the borrower. Other advantages of a financial service largely depend on the type of loan. The common advantages for all are:
- receipt of funds in full, unless otherwise provided by the terms of the contract;
- gradual repayment of the debt, which is stretched over several years, which provides a relatively small financial burden on the borrower;
- loyal attitude towards clients, which is especially noticeable when applying to a microfinance organization;
- possibility of early repayment of debts to a bank or MFO.
The advantages of the loan include a relatively low interest rate in cooperation with the bank and tight control over the financial market by the regulator represented by the Central Bank of the country. As a bonus, there are various ways to receive money and pay off a debt to a creditor.
Cons of an installment loan
The main disadvantage of any loan is the need to repay the debt with interest. Other disadvantages of this financial service are:
- the need to form and submit a set of documents to the bank. The list of documentation depends on the type of loan;
- confirmation of official employment and income level, which is a mandatory requirement for most loans;
- serious penalties imposed by the bank in case of delay or other violations on the part of the borrower.
An important disadvantage of lending is the difficulty or impossibility of obtaining financing for borrowers with a problematic credit history. Their number is constantly increasing, which makes the lending service less accessible to a significant part of Russians.
Compare different types of installment loans
Our loan comparison chart lets you compare various types of installment loans to decide which is best for you.
| Type of an installment loan | Advantages | Disadvantages |
| Personal loan |
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| Car loan |
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| Mortgage |
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| Purpose loan |
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| Business loan |
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| Pawnshop loan |
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Benefits of online installment loans
Before taking an installment loan online, you should weigh the pros and cons, and assess your real financial capabilities. Anyone over the age of 18 who meets the relaxed borrower requirements can apply via the Internet. You can even use special loan referral services that help to compare various loan offers from different microfinance organizations and choose the right option.
When applying for a loan online, all operations are performed remotely, so you do not need to go anywhere, which saves time and effort. Online companies work around the clock, so the application can be submitted 24/7 – at any convenient time. Microfinance organizations, unlike banks, have fewer requirements for potential borrowers. They must be adult US residents, have a steady income and a valid bank account. Also, they should not have other outstanding loans. In some cases, you will be asked to provide proof of income. Therefore, you should study all the terms and conditions carefully when choosing a suitable company.
For additional information, the client can always contact customer support by phone or e-mail. Borrowing cash online is a good opportunity to get extra money urgently if you have any financial difficulties.
Pros and cons of online lending
The main advantages of online lending include the following:
- quick application and approval;
- same-day funding;
- money is transferred to your bank account;
- loyal borrower requirements;
- no need to provide collateral and guarantors;
- convenient ways to repay the debt;
- funds can be used for whatever purpose.
The main reasons for loan rejection include false personal information, bad credit history, low monthly income, etc. Most companies offer new customers discounts and bonuses, which allows them to appreciate all the advantages of online lending.
Should I take out an installment loan in 2022?
In 2022, the situation with loans is ambiguous – some consumers believe that it is worth taking them as this is extremely convenient. Others are afraid of the “debt hole”. The truth, as always, is somewhere in the middle.
So how do you decide whether to take out an installment loan in 2022?
Do you really need this money?
A sudden breakdown of a refrigerator, a stove, and emergency health problems are good reasons to get a loan.
But buying a new branded bag or shoes is definitely not a worthy reason to borrow funds. You’d better save money for a few months and buy everything gradually.
Assess your income
If you receive a stable income every month and you still have some money left at the end of the month, consider installment loans.
If your income is high enough, but your paycheck is occasionally delayed, you’d better choose a credit card. A grace period without interest will save you from overpayments, fines, penalties and collection calls.
Do you need a small loan and you expect to receive your next paycheck in a few days? A payday loan would be a good option.
Do you need a large loan but your monthly income is neither high nor stable? Do NOT take out an installment loan. Look for any other ways, just do not get into a debt hole.
Assess possible risks
Even if you have perfect health or work at your current job for over 10 years, there are still risks. What happens if you become seriously ill or get fired? What if you have unexpected expenses? Think of a backup plan. Otherwise, paying off the loan will turn into a real stressful sprint.
Is it worth taking an installment loan NOW?
To find out whether it is worth taking an installment loan right now, answer a few short questions:
- Do you have a stable income now?
- Do you have existing loans?
- Are there rent/fine/tax debts?
- Are major expenses expected in the near future?
- Is your health stable?
- Will you be able to make payments on time every month?
Did you answer “yes” to most of the questions, then you can safely apply for a loan right now.
Things to know before your first loan application
Before concluding a deal with a lender, it is recommended to pay attention to a number of important aspects. The most significant ones are the interest rate and the total loan amount. The list of other nuances that affect the profitability of an installment loan for a borrower includes:
- the possibility of debt restructuring (which allows for changes in terms, payment schedule, commission reduction);
- need for guarantors and proof of income;
- the possibility of early loan repayment;
- need for collateral;
- bonuses and discounts;
- possible penalties.
When applying for large loans, it also makes sense to pay attention to an insurance policy. It is inexpensive, but it can reduce risks.
The clauses of the contract marked with an asterisk and written in small print deserve careful study. They may contain veiled provisions, according to which the terms of the loan in reality turn out to be not as favorable as it was stated in the advertisement of the product. For example, hidden fees are often masked.
Installment loans: Frequently asked questions
How do I stop loans from defaulting?
In order to avoid defaulting on your loan, you’d better regularly monitor the amount of debt to the bank. An alternative option is to use an “auto-payment” option, which is available to clients of most US banks. It provides automatic transfer of funds from a bank account within a specified calendar period.
What clauses in the loan agreement need a special study?
It is recommended to study the loan agreement in full, especially points on the interest rate and possible penalties.
How can I save on loan interest?
Banks offer benefits and bonuses for certain categories of borrowers. These are clients of a financial institution, owners of bank payroll cards, borrowers who have issued a voluntary insurance policy.
What is the total cost of a loan?
The total cost of a loan is the actual money you borrow plus all of the interest you will pay.