Budgeting is a crucial financial habit to have in both your personal and business routines. But you have to admit, real life has a way of interfering with your plans. COVID happens, your equipment breaks down, or your furnace stops working back at home. These unexpected emergencies can come along and throw your budget out the window.
While there may be no way to predict when an emergency will arrive on your doorstep, there are ways to prepare for them. If you don’t have savings, you might turn to installment loans online for help. Many people in the same position borrow these financial products, but how do you know if it’s the right option for you? This guide will help.
What is an Installment Loan?
An installment loan is a term loan, which means it has the following two features:
- A fixed amount of funds that you receive in one lump sum
- A fixed repayment schedule wherein you’ll make multiple payments (or installments) to cover your principal, fees, and interest
The word “fixed” means your funding amount and repayment sizes won’t change once you sign your contract, making them separate from revolving products like a credit card or line of credit.
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What Can You Use Them For?
Online installment loans have a unique purpose in your finances. Whether you use online installment loans for personal expenses or pursue their professional counterpart, they’re designed to help you with unexpected emergencies.
Broadly speaking, online installment loans direct lenders recommend their products exclusively for small, non-recurring bills or repairs that you can’t ignore or predict. In other words, don’t use them for regular bills or expected maintenance and chores.
Beyond that, there are no limits to how you can use these funds to boost your personal or business finances.
Why Go Online to Borrow Money
Heading to your laptop rather than your nearest financial institution comes with certain perks.
You’re busy running a business and household simultaneously — you don’t always have a spare hour or two to visit a financial institution during their opening hours.
By switching from in-person to online borrowing, you can skip the need for a lengthy interview process. The same goes for other steps involved with the borrowing process if you’re approved. You can receive your funds, review your terms, and repay what you owe over the Internet.
2. Faster Application Process
The online borrowing process can automate many steps that still require in-person oversight at brick-and-mortar financial institutions. As a result, online installment loans direct lenders run applications that provide quick results regarding your approval.
Borrowing when your credit score isn’t ideal. That’s why many financial advisors will recommend you work on improving your score before you take out money. But an emergency may arrive before you can make a meaningful change to this three-digit number.
While many in-person financial institutions may deny you due to your low score, some online installment loans direct lenders don’t use your credit as their only determining factor when reviewing your application. They may also look at your income, pay schedule, employment record, and debt-to-income ratio to determine if you qualify.
You can’t always predict when an emergency will strike, nor can you guess how much they’ll cost if they do. While they may be hard to budget for, there are ways to prepare.
Now that you know the nuts and bolts of this financial product, it’s time to research what kinds of rates and terms you may qualify for — these details can help you decide if this is an affordable fit for your emergency.
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