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What are the Most Common Installment Loans Available?

person signing contract with money on table

We don’t always have the money on hand that we need for emergencies or to afford those big purchases. Fortunately, when you find yourself short on funds, multiple loan options can help you afford exactly what you need.

Of these options, installment loans are a dynamic solution to many different situations.

Installment loans allow you to borrow a lump sum of money now and pay it back in regular installments over a set period. It may sound simple, but there are many different types of installment loans, each with unique characteristics. We’ll help you understand what are the most common installment loans so you can choose which one will help you most.

What Are the 5 Most Common Types of Installment Loans?

Installment loans come in many different forms. What are five examples of installment loans? Here are the most common ones:

1. Personal Loans

Personal loans can be used for almost anything, but many people get a personal loan to cover emergency expenses like medical bills and car repairs. Most personal loans are for smaller amounts, so they don’t need collateral or a credit check. However, because they have no collateral and are get-cash-fast solutions, the interest rates are often higher.

2. Student Loans

Student loans are taken out by college students who need extra resources to afford their education. Students use these loans to pay for all sorts of education-related expenses like tuition, school supplies, transportation to and from school, and rent. With a student loan, you may borrow money from lenders or even directly from the federal government.

3. Mortgages

Mortgages are a very common form of installment loan. In a mortgage, a lender gives you the money you need to purchase a house—but they take a lien against your home, so if you don’t make your payments, they can take your home from you. This loan uses your home as collateral, so interest rates are lower, and repayment is usually stretched across 15–30 years.

4. Auto Loans

Auto loans are used to pay for vehicles. Similar to mortgages, the lender gives you the money you need to purchase a vehicle, but if you fail to make payments, they can take possession of it. Many vehicle dealerships offer auto loan contracts themselves, but you can still get this form of loan through a bank or lending company.

5. Buy Now, Pay Later (BNPL) Loans

Buy Now, Pay Later (BNPL) loans are often found at a checkout counter or payment screen of an online purchase. These loans take the cost of a big purchase—such as a new television or piece of furniture—and break it down so you only have to pay a little bit at a time.

The length of time you spend paying off the item depends on the retailer and how expensive the item is. In many cases, these loans won’t even charge interest, making them a good option when trying to afford those big-ticket items you want.

What Is the Best Installment Loan Company?

You can get an installment loan from a few different types of companies, including banks, credit unions, and online lenders. Finding the best installment loan company can seem daunting unless you know what to look for.

There are several steps you can take to make sure the lender is legitimate and will get you the money you need without any issues:

  1. Review their eligibility requirements. Some lenders have very specific guidelines and requirements you must meet to qualify. To save your own time, make sure you meet these requirements before filling out an application.
  2. Compare rates and terms. Take time to compare a few different lending companies and what rates and terms they can offer you. You might want to prioritize a shorter repayment period or a lower interest rate. Checking a few lenders lets you find the loan that feels like the right fit for you.
  3. Read the fine print. Many lenders have hidden fees or conditions stating that if you miss a payment, you must pay heavy fines. Before signing any contract, be aware of all the loan terms (and be comfortable with them).
    The best installment loan company will look different for everyone based on their circumstances, but answering these questions will allow you to make the best choice for your unique situation.

Choose a Personal Loan with Power Finance Texas

When you’re looking to pay off an emergency expense or afford something you normally couldn’t, installment loans may be the right option for you. When you need to find the best company to give you a small, fast installment loan, you can come to Power Finance Texas.

Power Finance Texas specializes in quick and easy loans ranging from $100 to $1,250 that you can get in a day or less (often in minutes). Fill out an application and see how much you can get approved for.