In the world financial practice, there are credit products under the terms of which the borrower is obliged to repay the principal loan + interest by a certain date. However, installment loans differ from other loan products. Here the borrower has an opportunity to repay the loan gradually over a certain period of time. For installment loans up to $3,000, you can apply online in minutes in various installment loan companies.
The term “installment loan” is used in relation to personal loans (ordinary personal loans in cash, collateral loans, mortgage loans, etc.). Under the terms of such a loan, the debt is repaid partially, usually on a monthly basis. Such a loan repayment scheme is quite convenient for the borrower since the debt is repaid in parts, which does not undermine his or her budget.
Periodic payments on online installment loans with monthly payments can be equal (they are called annuities), or they can decrease each period as the body of the outstanding loan decreases (they are called differentiated). As part of annuity payments, the borrower initially repays mainly interest, and a small portion of the periodic payment is spent on repaying the loan principal. In the future, the share of the payment that goes to repay interest is reduced, and the part that goes to repay the loan body, on the contrary, increases. In the differentiated method, the monthly payment is formed as some part of the loan principal plus interest, the amount of which is determined based on the remaining outstanding amount. That is, at the initial stage, the monthly payment is higher than with the annuity mechanism, but in the future, it is significantly reduced.