Many non-traditional lenders spend a lot of marketing resources and effort to let potential customers know they provide alternatives to payday loans. That is an important point because payday loans incur the highest interest rates of all non-traditional loans and can result in a vicious cycle of debt. One answer from experienced lenders, such as Blue Trust Loans, is the installment loan.
Benefits of Installment Loans
These loans do not have to be paid back in one lump sum like payday loans. The terms allow customers to pay back loans over three, six, or twelve months at a slightly lower interest rate. Some loans are available with terms of up to twenty-four months. Scheduled payments of the indicated amounts are taken directly out of the bank accounts of customers when on the payment due dates.
Terms are adjusted according to how often customers get paid. Customers who are paid once a week, for example, will have smaller amounts taken out of every check. Those paid monthly will have one payment a month instead of four. There are no penalties for paying a loan off early, so customers have the opportunity to save money on interest if they so desire.
Payday Loans Are Still Available
Depending on the lender chosen, customers can elect to take out a payday loan. Some people find it easier to get the money they need immediately and pay it all back in one payment. Although the emphasis is on alternatives, the payday loan option still remains.
This type of loan is yet another option offered by non-traditional lenders. This incurs more risk on the part of the borrower. Money is loaned based on the value of a major item. That can be a car, a valuable collection, or even a house.
The title or deed is held by the lender as collateral. If the loan is paid back according to the terms, the customer is given back the title. If the loan is not paid off, the lender keeps the title or deed and becomes the lawful owner of the collateral. Higher amounts are loaned, but people risk losing their vehicle or home.