Loans are considered a financial operation of a single benefit (principal) and multiple considerations (payment of installments). The amortization, that is, the gradual repayment of the loan, will be made according to the duration, interest, and agreements reached that allows returning the principal of the loan with interest. If you want to request a loan, you need to find the best installment loans in the market.
Loans can be divided in many classes depending on their nature. Thus, we will say that it’s a simple loan if interest is not paid periodically, or a loan with the American system if there is a periodic payment of interest. There are several methods of financial amortization.
Besides, sometimes the loans are for a single benefit and consideration since the total return is agreed with interest at the end of the duration of it, that is, without the payment of installments.
Elements that make up a loan
These are the main concepts that you must know when receiving or working with loans:
Principal capital
It’s the amount of money that has been loaned and on which interest will be paid depending on the duration of the loan and the risk of the borrower of the loan.
Interest
It’s the financial cost of the loan, that is, the price of money. It’s the charge for the use of someone else’s money or capital for a time and is represented as a percentage of the principal.
Fee
Each one of the repayment payments you must make where the principal and interest are distributed.
Term
It’s the time during which the loan will be used. The term will run from the beginning of the contract until the last installment is paid, thus returning the entire principal and interest.
Lender
It’s the agent who lends the money, and the one who must receive the money in return along with some interest.
Borrower
It’s the one who receives the capital money and must return it as agreed, together with interest.
Choosing the best term when applying for a loan in a financial institution is a key detail to avoid interest cost overruns and to control the amount of money that will be dedicated to paying each installment.
Although for many people it’s unknown, the term that is chosen when receiving a loan directly influences the value that will be paid each month, but also on the amount of interest that must be assumed at the end of the credit process.
The truth is that according to the group of experts of a financial company, which offers payroll loans and other types of services to people with low credit scores, the most conscious decision when requesting a loan is to do it in the shortest possible time.
This is explained by the fact that a shorter period influences that the interest paid for the money received in credit is lower and, therefore, although the installment is higher each month, a lower amount is paid for a higher term.
There are also long-term loans, which are a valid option for those who don’t want or can make large payments each month and thus solve other obligations, it’s also a possibility that generates more expenses, according to experts.
This happens because by extending the term and maintaining the same monthly payment value, the amortization of the credit includes a greater amount of interest that is reflected in an also higher amount of money that must be returned at the end of the loan.
Best installment loans
To get pre-approved installment loans, you’ll need to check your credit score and investigate which loans you could apply for. It is a tedious process, that’s why we made up a list with the best installment loans for you depending on your credit score.
- Upgrade: you’ll need at least 560 points on your credit score, and you’ll receive from $ 1.000 to $ 50.000 with an APR rate of 5.94 – 35.47%
- Upstart: you don’t need a minimum credit score to apply, which it’s a good thing in case you have neglected your credit history a bit. You’ll receive from $ 1.000 to $ 50.000 with an APR rate of 5.38 – 35.99%
- LendingClub: you’ll need 600 points on your credit score, and you’ll receive from $ 1.000 to $ 40.000 with an APR rate of 7.04 – 35.89%
- Navy Federal: you don’t need a minimum credit score to apply, and you’ll receive from $ 250 to $ 50.000 with an APR rate of 7.49 – 18.00%
- PNC: with this installment loan you don’t need a minimum credit score to apply, and you’ll receive from $ 1.000 to $ 35.000 with an APR rate of 5.99 – 28.74%
- Rocket Loans: you’ll need a high credit score for this installment loan, up to 640 points and you’ll receive from $ 2.000 to $ 45.000 with an APR rate of 5.97 – 29.69%
- Universal Credit: you’ll need a minimum of 560 points on your credit score for this installment loan, and you’ll receive from $ 1.000 to $ 50.000 with an APR rate of 8.93 – 35.43%
- SeedFi Borrow & Grow Personal Loan: you’ll need at least 520 points on your credit score. You’ll receive from $ 1.200 to $ 7.000 with an APR rate of 6.95 – 29.99%
- OneMain Financial: you don’t need a minimum credit score to apply, and you’ll receive from $ 1.500 to $ 20.000 with an APR rate of 18.00 – 35.99%
If you do not have a large debt and you meet a good credit score, it will be much easier to choose the best loan and with the best benefits, because the banks will offer you better conditions.
Usually, loans are based on a variable interest, which means that at the time of obtaining the loan you will not be able to know what the amount of interest will be during the life of the loan. In loans with a small duration, the interest rate can be fixed, but for a longer duration, it is normal for it to be variable, keep that in mind when you choose your installment loan.
