Installment loans are usually your best choice when you need to borrow money. However, you need to choose wisely to ensure you’re getting the best product and lender.
Here are 5 reasons installment loans are your best choice over other borrowing options. We’ll also discuss what to look for in installment loans and lenders.
1. Installment Loans Offer Fixed Payments
Installment loans have fixed payments, regardless of what happens with interest rates. Once you obtain your loan, your payment is locked in until the end of your contract.
Obviously, this is a great thing when you’re trying to manage your finances. You can budget for the payment and you’ll know precisely when you’ll pay off your loan.
Your payment amount revolves around how much you borrow and the interest rate the lender offers. Your interest rate depends on your ability to repay, other factors such as your credit, and the lender.
Installment loans can be used for almost any reason. Borrow to consolidate your debt, repair your car, pay for a medical treatment or wedding, take a vacation, or pay for a move. A good lender offers installment loans for almost anything.
2. You Won’t Pay Compound Interest
This is an important consideration, because compound interest accumulates quickly. Credit cards charge compound interest which is basically interest that builds on an unpaid balance. Here’s an example.
You decided to charge $5,000 on your credit card. It provides a 28-day grace period. If you had paid off the entire $5,000 before that time, no problem. You wouldn’t pay interest.
However, you didn’t pay off the balance on their credit card. If you had the money in your bank account, you would have used debit instead. Instead, you wanted convenience. Your credit allows you to pay whatever amount you want, providing you pay at least the minimum payment amount.
Problems with Compound Interest
Since the average interest rate on a credit card is between 19% and 29.99%, interest can grow quickly. Plus, interest is charged daily, not yearly by the Annual Percentage Rate (APR).
In this case, your card has a 19% APR. This is divided by 365 days to determine a .052% daily rate. This means you pay $5,000 X .052, or $2.60 every day there’s a balance. On day one you owe $5,002.60. This may seem reasonable, until you realize that your balance increases daily. Your debt can grow quickly, because you must pay interest on the principle and added interest until you pay off the balance.
Simple Interest is a Better Option
Luckily, installment loans don’t have this issue. You pay simple interest. Interest is calculated beforehand based on the amount borrowed, length of the loan, and the interest rate. This amount is divided equally between all your payments. It does not build on the unpaid balance, which saves you considerable money.
3. You Can Easily Shop for the Best Deal Online
Interest rates can vary drastically between lenders and a good online lender makes it easy to apply. However, you shouldn’t apply randomly through multiple lenders.
Instead, choose lenders that use a no obligation pre-approval process. The pre-approval process relies on a “soft” credit inquiry that does not affect your credit score. You can safely compare what each lender offers without worry. The lender should mention pre-approval, otherwise they may use the traditional method of checking your credit.
The traditional method involves a “hard” credit inquiry. Banks, credit unions, and some online lenders choose to use this method as it provides them with in-depth credit information. However, this method has a bad side effect that can negatively impact your credit, whether the lender grants you a loan or not. It can lower your credit score by as much as 12 points. Plus, the inquiry stays on your credit file for up to three years and there’s no telling when your credit score will return to normal. Credit reporting agencies suggest it is “temporary”, but who knows what that means.
Additionally, if you apply through too many lenders using a hard credit inquiry it can send up a red flag on your credit report. It may appear you’re struggling to obtain credit, rather than just shopping around for the best rate. Clearly, the pre-approval process benefits you, the consumer.
4. Online Installment Loans Offer Convenience
Certainly, credit cards are convenient. However, online lending has made the process of getting installment loans quick, simple, and convenient.
You don’t need to take time out of your busy schedule for an in-person appointment. If you choose a good lender, you won’t need to fill out a lengthy application form either.
Online lenders often have less stringent requirements than banks and credit unions too. They often don’t need more than three months of home, income and banking stability. Additionally, they use digital income verification which is far more convenience for you since you do not need to provide pay stubs, a letter from your employer, or an income statement. Everything’s done safely and quickly through a bank snapshot of your direct deposits.
5. Fast & Efficient
A good lender tells you their requirements so you don’t waste your valuable time. Their application form is simple and straightforward and should take less than 15-minutes to complete.
Applying online through a good lender also means you’ll enjoy a fully-automated process. There’s no sitting around waiting to find out whether you’re approved. You’ll have your answer in minutes.
The pre-approval process allows you to see what the lender offers. Don’t like what you see – no problem. Continue shopping and never worry about your credit.
Should you want to move forward, the process is simple. Just accept the terms to trigger the creation of your loan contract. The lender sends it to you and you sign it digitally. In turn, this triggers the funds release.
A good lender could have money in your bank account within hours if you sign during business hours. If you sign in the evening or on a weekend or holiday, you can expect your money the next business day.
Luckily, establishing credit through an online lender doesn’t mean you won’t enjoy good customer service. In our digital age, a good lender still offers a toll-free number where you can talk to a real person. However, you should also be able to connect via chat, email, and website support. Of course, a good lender also empowers you with an in-depth FAQ so you can easily find answers to common questions.
FlexMoney Installment Loans Are Your Best Choice
If you’re looking for an installment loan, FlexMoney can help. We offer much more than our competitors and have a great reputation. Here are just a few reasons to consider for installment loans:
- FlexMoney operates in Ontario, British Columbia, Alberta, Nova Scotia, Saskatchewan, Newfoundland & Labrador, Prince Edward Island, and Yukon Territory
- We’ve granted loans to Canadians since 2012
- Our loans are open – pay off part or all of your loan at any time, without penalty
- No origination fee to set up your account
- 100% online process from application to funds release – – no office visits
- Simplified application form – most people take less than 15-minutes to complete it
- No minimum credit score requirement
- Our soft credit inquiry that does not negatively impact your credit
- We offer loans of between $500 and $15,000
- Repayment terms of between 6 months to 5 years with fixed payments
- Competitive interest rates – our pre-approval process allows you to “see” what we offer – compare us against our competitors
- No compound interest on your loan
- Decision within minutes of submitting your application
- Digital contract signing
- Fast funds release once you sign your loan contract
- Excellent customer service via our toll-free number, chat, email, and website support
- We’re 100% Canadian owned and operated – our customer service representatives live and work here.
Our Basic Requirements
We want you to know what we expect from you too. There’s no sense in wasting your time if we can’t help. Here are our basic requirements for our installment loans:
- Canadian citizen
- At least 20 years old
- Minimum net monthly income of $2,000 from the same source for at least the last three months
- Active account with a Canadian financial institution with at least three months of transaction and banking history
- Income paid by direct deposit
- Active cellphone number
- Valid email address.
Sorry, We Can’t Help If…
- You are currently enrolled in an active bankruptcy, consumer proposal, or credit counselling program.
- Your income is based on Employment Insurance, the Disability Tax Credit, or government benefits related to COVID-19.
- You supply false information in your application.
FlexMoney makes obtaining installment loans simple and easy. They a better choice than credit cards and payday loans and far more affordable.