If you have debt from various lenders–such as multiple credit cards, lines of credit, and loans–you may have difficulty managing all the payments. Additionally, some debts may have variable interest rates, meaning the amount of money you owe and pay each month could change from month to month.
Suddenly, your bills can feel overwhelming and out of control. That’s where an installment loan can come in handy.
Here’s what you need to know about using an installment loan to consolidate your debt.
What is an installment loan?
Installment loans are loans in which you borrow a fixed amount of money and pay it back in equal payments–usually monthly payments, but not always–at a fixed interest rate.
Installment loans are beneficial because you pay the same amount back every month for a set period, so they’re easy to budget. You don’t have to worry about interest rates changing or your monthly payment suddenly increasing.
How can I use an installment loan to consolidate debt?
An installment loan gives you fast access to cash–up to $15,000. You can use that money to consolidate all your debts from various sources. Rather than paying multiple lenders different payments at different interest rates, you can simplify your debt to make one payment to a single lender.
Benefits of an installment loan for debt consolidation
If you need an installment loan quickly, you can fill out an online application in 10 minutes or less and get instant funding in as little as 15 minutes. That gives you fast, easy access to cash.
Of course, you can also apply in person or on a mobile app.
Additionally, an installment loan often comes with flexible options for repayment. You can set the length of your loan to anywhere from 6 months to 60 months. If you need lower monthly payments, you can choose a longer payment term to have more cash in your pocket. But if you can pay off the loan more quickly than expected, you can repay early with no penalties.
Your loan payment schedule is dependent on your pay cycle. For instance, if you get paid weekly, you will automatically be scheduled to make weekly payments. Since these payments are automatically deducted from your bank account, you don’t have to remember to make payments yourself.
You can also enroll in a loan protection plan that covers monthly payments for up to 6 months if you become injured, sick or experience involuntary unemployment.
If all your debts negatively affect your credit score, having one monthly payment and making those regular payments over time may help you improve your credit score.
Who can apply for an installment loan?
Anyone can apply for an installment who:
- Is 19 years of age with a valid ID
- Has a chequing account
- Has a steady source of verifiable income
The bottom line
If you’re looking to consolidate your debts and simplify your finances, an installment loan can be a helpful tool to get you on track.
