An installment loan is a loan in which the act of repaying the funds borrowed plus any interest associated with the loan is broken into equal installment payments over time. Each installment consists of both principal (a portion of the amount borrowed) and interest. These amounts adjust as the loan is paid down where a larger portion of each successive payment is applied to the remaining principal balance.
Installment loans are helpful for businesses and individuals who need to manage the financial challenge of purchasing items or services that may not be affordable without a loan. Many Americans use financing plans to help buy a car, furniture or an appliance. A business may use an installment loan to finance an expensive, but necessary, item to continue to operate or grow their business. An installment loan may also be used to help cover emergency expenses, or an immediate cash need.
If either a person or a business has a need for cash immediately, they may not be able to afford it. The act of paying the full cost upfront might also drain funds needed to support other important activities and end up increasing financial stress in other parts of their life.
Installment loans can vary greatly in the loan amount, interest rate and lender characteristics. Because an installment loan is purely a type of loan that is paid in “installments”, many types of loans with monthly repayment terms fall within the installment loan definition. Banks, credit unions and independent online lenders like Jora offer installment loans. If you find yourself in an emergency and are unable to get a quick loan from your bank or credit union, a high interest installment loan with Jora may be a good option for you.
By spreading out the larger cost into payments over time, installment loans can make purchases more manageable.
Suppose you apply and get a loan for $5,000. In this example, let’s say the loan has interest with an Annual Percentage Rate (APR) of 10%. Let’s also say the agreement is to pay the loan back in one year in 12 monthly installments.
Once you make the 12 on-time monthly payments you will have repaid the loan.
An installment loan differs considerably:
Many installment lenders including Jora have an online application process making it easier and more convenient for you to apply. In fact, with Jora, the process can be fast and simple.
At minimum, you will need the following to qualify: