Loans play a helpful role in our lives. It is basically used to fulfill the need of money in a specific time of our lives. That specific time could be anytime you need something desperately.
As we know nothing comes for free and everything requires money. We can spend money on inexpensive things or uses but when a certain thing or use requires a lot of money then here’s when loan helps us.
We can take installment loans from a bank and easily fulfill the need for money.
What are Installment Loans?
Imagine you take a loan of 1 million rupees from a bank. Now the bank will give you a specified time of a year or two. In this specified time you need to return the money back. Of Course it would be difficult for you to return the whole amount at a time. So what you do is that you pay some amount every month to cover up the loan in the given time period.
This means an Installment Loan. The time period can vary from a few months to several years depending upon the amount of money you have taken or borrowed from a bank or company.
Types of Loan Installments
There are a few types of installment loans. These include
- Auto loans- Auto loans are the type of loan you take out to purchase an automobile, mainly a car.
- Mortgages- A mortgage is a loan in which you take out a loan to buy a property or real estate.
- Personal loans- A personal loan is a loan you take from a bank or any loan source and you can use it in any way you like. These types of loan are not backed by a collateral
- Student loans- A student loan is given to students so that they can pay for their higher education and tuition fees etc..
These were the types of installment loans you take from a loan source.
Now I will talk about why paying for your installment loan on time or early is helpful for you.
Well we know that we will have to pay our loan on time or it causes many problems.
If you pay your installment loans on time and do not delay it obviously increases your credit score which is really important nowadays for mortgages or loans. One can also secure credit score with simple installment option instead of traditional ones.
But there’s even more advantage if you give out a loan early. Many loan lenders allow you to pay your loan early.
The benefit of giving out your loan early is because you can get rid of a lot of interest that you would have to pay if you pay your loan from time to time.
Now obviously if you can’t pay it off early then you should at least pay it on time but in case if you have a large amount of money then you should definitely pay off your loan as early as possible cause it will save you from a ton of interest.