It’s a type of loan that you pay back over a period of time, paying a certain amount at regular intervals. For example, let’s say the amount you borrowed, plus the interest of the loan, totaled $1,200, the length of the loan was one year, and the repayment interval was monthly. You would have to pay $100 every month for one year.
What’s the difference between an installment loan and a credit card?
Installment loans require a regular, normally monthly, payment from the borrower, just like credit cards. However, there are two major differences:
- Available Credit
- Interest Rate
Available Credit: When you get an installment loan, you receive a fixed, lump sum of money. A credit card gives you a line of credit that you can draw on as you need it.
Interest Rate: Interest rates of installment loans are often fixed for the duration of the loan. Credit card interest rates can fluctuate based on things like, missed payments, changes in credit scores, etc.
What are the different types of installment loans?
Below are several of the common title loans. There are others, like an auto title loan.
- Personal Loan
- Auto Loan
- Student Loan
Personal Loans: These are usually unsecured. Because of that, lenders must use your credit score to determine the terms of the loan. They will generally be less-favorable than if the loan was secured with some sort of collateral.
Mortgages: Mortgages are generally for large sums of money, the cost of a house for example. They are secured against the property the loan is being used to purchase.
Vehicle Loans: The lender will pay the full value of the vehicle up front. Then the borrower will pay them back, plus interest, over the life of the loan.
Student Loans: These are meant to help cover the costs of post-secondary education expenses. They can be used for things like, tuition, living expenses, books etc.
How much money can I get for an installment loan?
That depends on the type of loan. For example, mortgages are intended to cover the cost of a home and can be for tens if not hundreds of thousands of dollars. Personal loans may be for only a few hundred dollars, enough to cover a smaller emergency expense. Generally, if you are securing your installment loan with collateral, like a car, you can borrow more money for a longer time at a better rate.
What happens if I can’t pay back my installment loan?
The first thing that can happen is that your credit score can be damaged. This can impact your ability to secure future financing for things like student loans, a house, a car, etc. If your payment is over 30 days late, your lender may report your delinquency to the three major credit bureaus, TransUnion, Equifax, and Experian. They may report it again after it becomes 60, 90, and 120 days overdue. What this means is that failing to repay a single loan can have a massive impact on your credit history.
It’s also possible that the lender will take the borrower to court to try and recover their money. This can result in an expensive legal battle. If the borrower loses, they will be forced to pay the original debt, their own legal fees, and possibly the legal fees of the lender. If they can’t pay, they may have to declare bankruptcy.
If the borrower secured the loan with collateral, like their house, the lender may repossess it if they fail to pay the loan. In this instance, the lender will likely sell it to recover their losses. Depending on the state laws, if there is money left over from the sale, after covering the original debt and the lender’s expenses, it may go back to the borrower, or stay with the lender.
Can I use my car as collateral for an installment loan?
Of course! If you own a car with a clear-and-free title in your name, you can use the title as collateral for an auto title loan.
What’s an auto title loan?
An auto title loan is a secured loan with a short application process that uses your car title as collateral. As with all installment loans, you pay a portion of the principle plus interest each month for the duration of the loan. Like a vehicle loan or a mortgage, your loan is secured with collateral. This allows you to get a better interest rate than with an unsecured loan. There’s no lengthy application process because lenders are more concerned with the value of your collateral and your ability to pay. If you want an auto title loan, you’ll need just a few things1:
- Clear-and-Free title for the vehicle
- Proof of Income
- Government-Issued I.D. (Driver’s License, State I.D., Passport, etc.)
- Proof of Residence (Certain pieces of mail)
- Photos of the front, back, and sides of vehicle
How do I get a Title Loan with LoanMart?
You can easily sign up for a title loan from LoanMart to cover emergency expenses without waiting for the lengthy application process of some other secured loans. You can potentially qualify for an auto title loan of up to $30,0001. Because of the short turnaround time of LoanMart’s streamlined application process, it may be less than 24 hours between when you submit your information and when you receive your loan3.
With our easy process, we give you three ways to contact us that makes it convenient for you:
- Visit a participating location
- Call us at 1-844-237-5530
- Sign up online without leaving your home
Once you’ve decided how you want to get in touch, just follow these steps to get the money you need:
- Fill out the registration form.
- Submit your important documents to your LoanMart representative.
- Sign your LoanMart agreement.
- Collect your funds1!
If you need a short-term loan to cover emergency expenses, you should consider an auto title loan. The terms will be better than a typical unsecured loan and you can get your money faster than a typical secured loan.