Some emergencies happen that can sometimes require more than just a couple of hundred dollars to get out of, and that is where installment loans may be an ideal option. For millions of consumers in America each year, installment loans are a lifeline that helps them make ends meet, keep the lights on, keep dinner on the table, and have gas in the car.
With that in mind, it’s still critical to understand the various charges that you might see on an installment loan. You’ll be told about these fees when taking out the loan, but it’s always good to know ahead of time. We’re going to break down the costs of installment loans, and when they are a good idea to use. We’ll also cover why Lending Bear is best suited to be your short-term lending partner in many parts of the country.
Before we get into fees, many people are probably asking themselves what installment loans even are. It’s simple: an installment loan is any loan that is taken out and subsequently repaid over time with payments (installments) made at predetermined intervals.
Though the payments are generally required monthly, many types of loans require payments on a more frequent basis. Installment loans can be used for nearly anything you can think of, but typically they are used for debt consolidation, emergency funding, and home repairs.
Origination fees are charged by lenders to process your application and cover the basic costs of underwriting the loan. These fees are often nominal but can approach 10% on some loans. They are either deducted from the loan disbursement or added to the loan balance, depending on the loan agreement.
Interest rates are the cost of borrowing money, which is expressed as a percentage of the total loan amount. Interest rates for installment loans can vary significantly from one lender to another, depending on the lender and the credit profile of the potential borrower. The best way to get lower rates is to improve your credit history and, as a result, your credit score.
Some installment loans come with prepayment penalties. These are penalties assessed when you pay off a loan too quickly, or before the end of the agreed-upon term. Many people don’t understand how paying off their loan early could be bad, but some loans feature prepayment penalties to ensure the lender receives a minimum amount of interest when making a loan. Check your loan agreement to see if there is a prepayment penalty for your installment loan.
Being late with a payment, or missing one entirely, can lead to late payment fees and other charges. These fees are often either a fixed amount or a percentage of your overdue payments. The best way to avoid late payment fees is to make all necessary efforts to pay loan payments on time. Late payments are a significant part of the overall credit score as well.
If you have a check or debit transaction that bounces, it could lead to an NSF fee or a fee for non-sufficient funds. These are often between $25 to $40, and when they are applied to daily convenience transactions it can be expensive.
At Lending Bear, we take pride in being a reputable lender that can help individuals find unique funding solutions for their needs. For more information on installment loans, reach out to Lending Bear today. Cash when you need it, fast and friendly!