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How Do Installment Loans Work?

An installment loan works for anyone needing extra money at any given time of the year. They can be used to cover basic needs, small emergencies or even help consolidate debt. 

 

What Is An Installment Loan?

An installment loan is a type of loan that is repaid over time through fixed monthly payments. After borrowing the funds, the loan is repaid through scheduled installments, which you and the loan representative determine when you sign the agreement. Each payment is known as an installment which is why it’s called an installment loan. Some examples include automobile loans, personal loans, student loans, and mortgage loans.

 

How Do Installment Loans Work?

A less than perfect credit score may keep you from getting approved for a personal loan from a bank, credit union, or a credit card. This is also true if you had some financial difficulties in the past. Installment loans offer the peace of mind of knowing your debt can be paid off by a set date.

A major difference between payday loans and installment loans is that payday loans require full payment on your next payday. The payment is automatically withdrawn from your bank account. Combined with high-interest rates, and additional fees, repayment can be near impossible depending on your circumstance, resulting in either yet another payday loan (a vicious cycle) or a default on the loan.  

Installment loans offer a convenient, month to month payment plan. With an installment loan, there are no surprises. You know exactly how much you need to pay and for how long. Like with any transaction, you need to make sure you understand the terms and conditions of the loan, as some fees and penalties may apply.  

 

Installment Loan Requirements

Financial stability is a major factor in getting an approval.  At Sun Loan, for example, the decision for loan approval is based on the customer’s ability and willingness to repay the loan. This gives you the advantage of rebuilding or establishing your credit. In addition, the fixed, monthly payments make it easier for you to pay off the loan on time. 

Quick and easy list to see if you would qualify for an installment loan:

  1. Residency: You need to be a resident of the United States.
  2. Age: You need to be at least 18 years old. The minimum age in Alabama is 19 years old.
  3. Financial History: We will need to look at your financial history.
  4. Financial Stability: You need to have the ability to make the monthly payments required to pay off your loan. That money can come from work income, retirement income, Social Security income, or other sources.

There are several things we consider when reviewing your loan application and determining whether you qualify for one of our personal loans.

How To Apply

  1. Start with filling out the application online, in-store, or by phone.
  2. If you are pre-approved, you’ll need the following documentation:
    • Picture ID with signature (driver license, state-issued ID or passport)
    • Address verification (most recent utility bill, water bill, etc.)
    • Employment and income documentation (most recent paycheck stub)
    • You may be asked to provide additional information, including the following:
      • Phone numbers of personal references
      • Former employer or landlord information

Requirements are different from state to state. Be sure to call your local Sun Loan Company office to get a complete list of documents you will need to provide.

 

Key Advantages of Installment Loans

  • Fixed rates* 
  • Fixed payments
  • Easy repayment plan
  • Establish and rebuild credit
  • Large loan amounts up to $4,500 (loan amounts vary state to state)

*Rates are based on state regulations. 

Now that you know how installment loans work, you know where to turn when you’re in a pinch, or simply need extra cash, and prefer flexibility. Know that you can depend on Sun Loan to help you get the money you need. There are no surprises when you work with us. Our trusted team will have answers to all your questions. Call us at (844) 786-7100 or find your local Sun Loan office today!