Introduction

Small, short-termĀ installment loans online differ from their larger counterparts, such as mortgages and auto loans, in that their typically only held for a period of two to four months and are rarely for an amount greater than $1,000. Interest rates for these loans tend to be higher than longer term credit, but lower than many other short-term loan options.

Installment loans are often a preferable alternative to higher interest short-term loans, such as payday loans or cash advances. While the interest rate is typically lower than other forms of alternative financing, the installment loan provides customers with terms similar to those of institutional loan products.

Installment loan supporters argue that the increasing demand for this type of borrowing arrangement is a clear sign of the intense need in the financial marketplace for alternative banking products, and that increases in regulation would be a disservice to these underbanked consumers.

Online Installment Loans

An installment loan customer will usually be able to choose a repayment period that works around his or her financial situation. This flexible schedule not only makes installment loansĀ more convenient for borrowers, but it also decreases the risks of cycling through renewal charges or late payment fees. In the end, an installment loan can be a lower risk and more cost effective solution to alleviating short-term cash flow problems.

The purpose of this study is to get a more complete picture of how people are using small, short-term installment loans and the subsequent effects on their financial situation.

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