An instalment loan is a loan in which there are a set number of scheduled payments over time. Many different types of loans are instalment loans, including mortgages and auto loans. A credit card may require a monthly minimum payment but it is not an instalment loan.
How does an instalment loan work?
Instalment loans offer access to larger loan amounts. They also have longer repayment periods than cash advances. They can decide on a shorter loan term and make larger payments, or spread smaller payments typically a longer payback period.
What is an unsecured instalment loan?
Unsecured instalment or revolving loans, sometimes called personal or signature loans, can be used for a variety of personal expenses, such as bill consolidation, education expenses, or medical expenses. There is no collateral requirement for an unsecured loan. The terms of the loan might range from 1-5 years.
What is an example of an instalment loan?
These types of loans have a set start point and end point. If you want to borrow more, you have to apply for another loan. Instalment credit is an important aspect of your credit score because it shows that you can maintain a payment over time. Examples of instalment loans are car loans, mortgages, and student loans.
What does student loans mean?
A student loan is a type of loan designed to help students pay for post-secondary education and the associated fees, such as tuition, books and supplies, and living expenses.
What is an instalment loan and when are they used?
An instalment loan is a loan that is repaid over time with a set number of scheduled payments; normally at least two payments are made towards the loan. The term of loan may be as little as a few months and as long as 30 years. A mortgage, for example, is a type of instalment loan.