Why Should People Get a Short-Term Installment Loan?
Short-term installment loans are a useful financial tool for many people. While installment loans are often thought of as nothing more than a means to an end, the truth is that these loans can serve several purposes. Short-term loans are often used by those who:
- Need financial help quickly,
- Want to make big purchases without eliminating their liquid assets,
- And are looking to build their credit back up after a serious credit score drop.
Short-Term Installment Loans Bad Credit
One of the most common reasons to get a short-term installment loan is because your credit is damaged. As such, this type of loan may be a bit easier to get than the average credit card, especially if you need to borrow more than a few hundred dollars. Simply having the ability to access any type of cash with a poor credit score might be a life-changing opportunity for some.
It’s important to remember that these loans always involve a credit check. As such, any advertisement of "short term installment loans no credit check necessary" is generally either disingenuous or a scam. While it is possible to get this type of loan even when you have bad credit, every lender will check your history. Having awful credit will almost certainly change the term of your loan, but it may not actually stop you from getting the money that you need. As such, this type of loan is ideal for those who can’t get money any other way.
The best news about getting short-term loans is that you may only need to make a limited number of payments. If you can manage to free up a bit of your budget every month, you may be able to use a short-term loan to get your finances back on track.
Avoiding Late Fees
Late fees can be expensive, especially if you have multiple accounts overdue. In some cases, those late bills can also cause your credit score to drop. If you’re looking for a good way to avoid paying out late fees, getting a short-term loan might be an option. This will not only allow you to pay off your debts on time, but it will also allow you to pay back the money you’ve borrowed at a somewhat slower pace. This can be ideal for anyone who knows that he or she will have money soon, but that has bills that are due. Even better, long-term installment loans may help you save money by eliminating the high costs that are associated with late fees.
Short-term installment loans can be a way to dig yourself out of a late-fee induced financial hole. If you know that you’re going to have the money to pay off your loan soon, you can take out the loan before your bills are due, pay your bills, and then pay off your loan as soon as your next payday comes around.
Taking Care of Short-Term Problems
Emergencies happen. Unfortunately, most Americans are not in a financial position to deal with even a minor financial setback. While you can make arrangements with some of your creditors, there are many – including banks and landlords – who would be more than happy to remove you from your home even if you’re able to make your payments just a week or two later. If you are facing the prospect of losing everything because of a financial emergency, taking out this type of loan can be a way to hold your life together without making drastic changes.
The good news about these loans is that the monthly payments tend to be relatively easy to set up. You can think of it as taking whatever money you need to pay for your emergency and dividing it up over the course of several months while adding interest and fees to the amount owed. This not only allows you to take care of an emergency situation quickly, but it may also leave you able to pay your other bills on time. This means that you may not get stuck in even more of a financial quagmire simply because you had an unforeseen situation come up at the last minute.
Making Major Purchases
If you need to make a major purchase and you have cash on hand, it’s almost always better to use the money you have rather than get into debt. Small installment loans are expensive.
When you pay for something outright, you are taking a huge amount of money out of your bank account and denying yourself the chance to use that money in any other way. However, borrowing money that comes with fees and high-interest rates will only make it harder to save money in the future. It’s better to spend what you have when you need to, and then work on saving money in the future.
An oft-overlooked aspect of taking out a short-term loan is credit building. The credit bureaus like it when people make payments on time. On the other hand, it can take years for a missed payment to fall off your credit report. You want the ratio of on-time payments to late payments to be in your favor. If you take out a short-term loan, you can start adding in new, on-time payments, assuming your lender reports to a credit bureau.
If you’re going to take out a short-term loan to improve your credit, you just need to follow a few basic rules. First and foremost, make sure that your lender reports your payments to the credit bureaus. Once this is done, make sure that the loan won’t skew your debt-to-asset ratio into an unfavorable position. Finally, ensure that you will be able to make your payments on time so that you won’t do further damage to your credit score. With a little planning, you may turn your loan into a major financial asset and a great first step toward an improved ability to borrow.
Choosing to get an installment loan that’s paid off over a relatively short period can be a way to accomplish several financial goals. Whether you want to get your finances back on track, borrow installment loans with bad credit, or build up your credit score, these loans may be able to help.