Due to the high risk factor involved in installment loans, most of them come with high interest rates. For instance, an individual opting for a high interest rate loan may not be able to pay off his installment payments for several years. However, with a higher interest rate, one can expect to make lower monthly instalments in the long run, thereby paying off the loan in a lesser period of time. Read more here
Learning The Basics of Borrowing Hard Money
Another disadvantage of these loans is that when the borrower defaults on his instruments, he has to face repossession of his property. This happens if the loan amount exceeds the value of the property. Most people opt for installment loans to supplement their income as their normal source of income.
Instalment loans as a source of finance are best suited for borrowers who are capable to meet the repayment obligations of these loans at the specified repayment date. Examples are those who are self employed and have low incomes. There are some other circumstances that can qualify a borrower to be granted with a home equity loan. For instance, a borrower who is planning to buy a new home and has decided to use the loan as a down payment may be eligible for this loan scheme.