A few years ago, I left my job in America, packed my bags and a laptop, and went to live abroad as a freelancer in places like Turkey, Ukraine, and Vietnam. These are places where even a modest income will earn you a comfortable life, and where your typical Westerner will always have something new to discover. Much like Lu Lovely documented in her article, What Are The True Costs of Going Freelance, I ran into the hurdles of such a life decision early in my plans. Despite my best efforts, I hadn’t been able to get much money set aside, but I was able to help kickstart the process of changing my life and moving overseas by the use of instalment loans.
For those who haven’t used instalment loans, they’re a safer alternative to payday loans when you find yourself in need of an infusion of cash. Whereas a payday loan holds your next paycheck as collateral and requires a large lump sum payment, instalment loans can be covered in multiple, smaller payments.
Pros
Short-term instalment loans are a form of easy credit arranged quickly and without collateral. Online instalment loans can be applied and paid completely via the Internet. This is an invaluable advantage in some sets of circumstance. You have a fixed repayment schedule over the life of the loan, and you can either fit those payments into your budget or pay it off ahead of time, saving on interest in the long run. And while missing a payday loan can trap you in a cycle of debt, missing a payment on an instalment has much lower stakes.
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Ease of access
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Low risk
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A reasonable timetable for payment
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Flexible payment plans
Cons
Speaking of interest, that’s the greatest drawback of instalment loans; while the ease of application for one is excellent, they suffer from higher interest rates than a bank loan. The length of repayment, relative to a payday loan, also offers more opportunity for circumstance to strike and cause you to miss a payment or two, which would hurt your credit score. Short-term payday loans offer more security if you’re certain that you’ll be able to pay them off in time.
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High-interest rates
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The potential for lowered credit score
The process to apply for one is blissfully simple. Some criteria need to be met, such as not being a debtor or involved in a bankruptcy case, meeting a minimum income requirement, and having a bank account that’s been open for a satisfactorily long time. Once these criteria have been confirmed, it’s a matter of selecting your repayment schedule. For new customers, this is usually a six-month schedule with payments scheduled on payday.
Once your application has been completed, you can often end up receiving the money directly in your bank account that same day. More reputable providers offer 24/7 customer service and can easily be called to inquire about your application or any information you desire.
As for sums that can be applied for, many providers offer a first-time loan in the vicinity of $1,200. A reasonable expectation for future payments could rise as high as $2,000 or further. Compared to the predatory tendencies of payday loans to charge interest rates as high as 400%, instalment loans have gone a long way to legitimize short-term lending as a respectable, honest source of emergency funds to help people in a bad way.
Online instalment loans have revolutionized the short-term loan industry. The final step – payment – is completely automated. The online payments are automatically deducted from your bank account on the payday-based schedule.
When you’ve got an emergency – your car broke down, a family member fell ill, or you otherwise need cash now – your options are often-predatory payday loans or a lower interest, safer instalment plan. Delay only tends to make problems worse, so it’s important that you assess your options and quickly make the best choice for you. When your choice is a payday loan or an instalment loan, the best choice will often be an instalment loan, online or otherwise.
