Installment or Revolving Loans? If you compare them, you might find important differences between them, and both can be used to gain access to instant cash in times of economic emergencies, and both can be used to rebuild and repair your credit. The key is in knowing and understanding the difference between these two distinctive types of loans, and which one to use depending on your situation.
Installment loans are loans where the borrowed amount is generally paid out in a lump sum either to the borrower directly, or to a third party such as a financial institution for the purchase and transfer of property such as buying a home or a car. An installment loan receives its name from the fact that the loan is paid off in regular installments.
In some cases, installment loans will be amortized with interest rates being adjusted over the course of the installment loan. In these cases, a larger percentage of the installment payments will be made during the early years of the loan. As a larger percentage of the interest is paid off, more of the installment payment will go to the principal loan value, with less being used to pay off interest.
This is why in long-term installment loans, if additional payments are made, it should be applied to the principal value of the loan, decreasing the overall amount of interest that will be paid over the course of the loan. This of course also presumes that the loan may be paid off early without incurring any financial penalties or additional charges.
As was previously noted, home mortgage loans and auto loans are prime examples of installment loans, but certainly not the only ones. Most of the payday loans and other instant cash loans online are set up as short-term installment loans. Even most pawn shop loans are established as short term installment loans, though based on the value of the collateral provided to the pawn shop.
Revolving loans are loans where there is a revolving line of credit involved, and loan values must be paid off specifically as per the contractual agreements between the borrower and the lender. These types of loans are an excellent way to build and repair credit, though in the early phases of credit repair, it is important to remember that many of the revolving loans will require collateral of some sort, or may otherwise be limited and restricted until such a time as the borrower has established a good rating with the lender, if not the big three credit reporting agencies.
Credit cards are perhaps the most exemplary form of revolving credit loans, but there are other forms that most people do not even consider when they are working on rebuilding and repairing their credit. Your utility payments are among the most overlooked types of revolving loans, and can, in many cases, help or hurt your credit score depending on your payment history.
It is also very commonplace for small business owners to establish revolving credit loans with vendors and suppliers, in order to allow them to get the materials they need to do their work, and pay off their debts once the final products have been sold.
On some occasions such as with restaurants and other suppliers, payments may be based on a thirty to ninety day invoice. In the case of many construction contractors, payment may be negotiated to be paid in full after the construction has been completed and sold.
Both installment loans and revolving lines of credit or revolving loans can help and hurt your credit score. As for determining which type of loan you need, it is going to depend on what you need the loan for, and how you plan on paying it back.
If you have stellar credit, you may just walk into any car dealership and walk out with a new car using a basic installment loan. If you have less than great credit, you may need to pay higher interest rates on a different type of installment loan as you rebuild your credit and improve your credit score. Some people will actually buy a new vehicle using nothing more than their credit card.
If you are starting your own business online or off, you may be better off looking for a means to create a revolving line of credit, or get revolving loans with other industries related to your business. As was previously noted, these can usually be more easily negotiated, but not always.
Yes. Standard interest rates for many instant cash loans and other payday loans online are often cheaper than the normal interest rates for unpaid balances on credit cards. In such cases, the pay day loans online are a much cheaper and better option than carrying over an unpaid balance on your credit cards.
Neither revolving credit loans or installment loans are necessarily going to help your credit any more or any less. What the big three credit reporting agencies are going to look at is your overall history of paying off the loans you get, no matter what type of loan you have a history with. There are of course, additional factors that will determine your overall credit score, but they are not necessarily relevant here.
It is surprisingly easy to get both a revolving line of credit or revolving loan, and an installment loan online or off. There are many different companies that offer you the option to obtain virtually any type of loan regardless of your credit score. What you need to consider when trying to find the best loans online is what your personal needs are and what your personal financial situation is at the moment.
If you need to pay off credit card debt and you are in a hurry and need to find the best place to get instant cash, you will probably be better off with a pay day loan or an instant cash loan online in whatever form.
Conversely, if you are trying to rebuild or repair your credit score, you may be better off saving up a little money and looking for a secured credit card that you can use to begin paying off your debts, and rebuilding your credit score at the same time.
Safe Loan offers short term installment loans in the form of payday loans and other instant cash loans online. If you are going through an emergency situation, and you need access to instant cash fast, Safe Loan is probably one of your best bets.