Installments loans are personal loans that are advanced by several types of banking and financial institutions. Installment loans are unlike payday loans in that the loans are not paid back completely in a single or few payments. Installment loans are paid in installments of a set period of time depending on the amount. These amounts can vary depending on the customer, institution, and state and federal state regulations. However, most institutions do have limits. These limits are based on the customers’ ability to repay, as well as, the stated regulatory authorities. Some installment loans are offered from lenders that many deem as predatory. However, people in need should not incur this type of debt without the ability to repay.
However, these loans can be a welcome addition to a struggling business or family that can afford the loan because the repayment is being spread out over time. Installment loans in some cases can be considered lines of credit. In this manner, the customer is advanced the loan issued directly from the lending company. These loans can sustain companies and individuals without them incurring massive one time repayments. Most installment loans originate either from banks or lending institutions that specialize in personal loans. Some of these companies do engage in reckless lending practices and predatory means of lending with exorbitant interest rates.
To avoid these scenarios, people can access installment loans from credit unions. Credit unions are regulated by federal, state and local laws. This means that their lending practices are heavily scrutinized for irregular behavior. Often, credit union installment loans are also offered as lines of credit. However, this is not as important because the loans are paid back the same as all installment loans. Credit unions offer these loans in several scenarios. If the loans are secured by the amount of money being saved by the customer at the credit union, the loans are considered secured. This means that the loan limit in most cases will not exceed this amount.
Unsecured installment loans and installment loans used as lines of credit also feature limits. However, these limits are assessed by the lending authorities. This diligence is necessary because the loans are not secured with matching funds. This is why some institutions offer installment loans as lines of credit to those that may be deemed risky. Banks and credit unions have some access to the loan when lending in this manner. This mitigates the risk of unsecured loans in general. Credit unions are by far the best alternative to payday lending companies that are masking payday loans by referring to them as installment loans.