Hey Debt Fighters. As you know there are many different types of debt. One such type of debt comes from installment loans. It seems simple to pay back installment loans, but some consumers are confused with the process. The information here will help you understand your options when making scheduled payments. Before getting into the repayment process, here is a bit of advice on accepting the loan and its terms. Make sure that you are able to make the payments as they are noted in the agreement. Also be sure to read the terms and conditions of the loan carefully for hidden fees.
Installment loans are an extension of money based upon your need, income and credit rating. These loans are mainly secured for business purposes, mortgages and car loans. Installment loans are paid in monthly increments including interest over a specific period of time. Some lenders offer multiple repayment plans to better assist their clients with repaying the loan in full.
The repayment terms are broken up into a specific number of payments. The payments are typically on a monthly basis. Some can be broken up into semi-annual payments if the loan amount is not significant. Keep in mind that you will need to set reminders for when your payments are due to prevent the inclusion of late fees or administrative fees that lenders can impose. This causes the next payment to be slightly higher due to the additional fees. Late fees and administrative costs do vary depending on the lender.
The easiest method of repaying an installment loan is to set-up automatic payments. This will automatically debit your checking account on a specific day each month. This is a convenient option and prevents you from ever missing a payment.
It does become inconvenient, however, when you are faced with a financial crisis and are unable to make the payments. It is ideal to contact the creditor to stop the automatic payments and begin receiving actual statements from this point forward.
You can opt-out of automatic payments with an installment loan. This will direct the lender to send statements either via email or by regular mail each month. You’ll have a due date on the bill and it will show the payment amount. It is ideal to make this payment ahead of time and pay a little more than the requested amount to help pay down the principal faster.
Methods of payment accepted by most lenders:
These are the most common forms of payment and are widely accepted for nearly all lenders.
Given the options listed above, you should be able to obtain a feasible plan of action for repaying your installment loan. Again, it is important to make these payments on time or early as late payments reflect poorly on your credit rating and accrue interest. Always make sure that you select the best option for your financial needs when setting up the repayment of an installment loan.