The most popular type of loan by far is an installment loan. Applying for one can seem overwhelming. With so many different choices, it can be hard to know which kind is right for you. And then there’s the loan application process, which can also be daunting.

But choosing an online installment loan can make the process much simpler and faster than it’s ever been before.

Online installment loan compared to a traditional installment loan?

An installment loan is simply a specific amount of money you borrow and then pay back within a certain time frame with a fixed payment every week, two weeks, or month. The timeframe and frequency of repayment are decided by you and your bank or lending company.

An online installment loan is essentially the same as a regular installment loan, but the application process and the time you receive your funds is much quicker and easier because it’s all done online. Online installment loans are often managed by specialized direct lenders, such as Leap Credit, rather than through a bank.

installment loans

What types of online installment loans are there?

There are a variety of installment loans to choose from. The type of installment loan you get usually depends on the terms that are offered, which can range from as little as two weeks to as long as 30 years.

The most common types of installment loans are:

  • Home loans – Otherwise known as a mortgage, this kind of installment loan is used to buy a house and payback periods typically range from 15 to 30 years. You can usually get the choice of a fixed or adjustable interest rate.
  • Auto loans – Offered by banks, credit unions, and car dealerships, auto loans typically include interest rates from 3% to 15% and a payback period from 60 to 72 months.
  • Personal loans – These loans are offered by online lenders, banks, and credit unions and can be used for almost anything. Personal installment loans can be repaid in weekly, biweekly, and monthly installments and interest rates are generally from 6% up to 36%. Rates and terms can vary among lenders and usually, you can prequalify for a personal loan with a credit check that won’t affect your credit.

The Pros and Cons of online installment loans

There are several pros to taking out an online installment loan. Not only are they fast and convenient but you know exactly how much you need to repay each month because the interest rates are fixed, which means they won’t fluctuate depending on the stability of the market. Interest rates can be determined by your credit, however, even candidates with bad or little to no credit can sometimes qualify for an online installment loan. With online installment loans, you can borrow more money than what is typically allowed with credit cards or other types of revolving credit.

When it comes to online installment loans, practice caution when it comes to some lenders, as they often target borrowers with poor credit. These lenders include payday loans with high borrowing fees or hidden costs.

If you choose to take out an online installment loan through Leap Credit, you have the peace of mind knowing that:

  • There are no hidden fees
  • You pay simple interest, not compounding
  • The loan process is fully automated
  • You get faster access to your funds
  • We are state-licensed and are in compliance with state regulations

Is an online installment loan right for you?

When considering an online installment loan, educate yourself on how it will affect your budget and long-term credit. Make sure you’re realistic in how much you can afford to pay each month when paying back your loan. Your ability to pay back your online installment loan on time and in full, without penalties, will have a positive effect on your credit score. However, if you’re late on payments or you miss one ore more altogether, and your credit score will be impacted negatively, making it more difficult for you to get future loans.

For more information, Forbes has a great article on online installment loans and whether they are right for you.

If you’ve decided that an online installment loan is your best financial option, think about applying for a Leap Credit loan. The process is super easy and your funds will be directly transferred into your bank account in as little as two business days.