An installment loan is a financial product that enables individuals to borrow a sum of money depending on their business needs. The installment loan has a fixed amount of interest rate, and it will need the borrower to make periodic payments.
How do Installment Loans work?
An installment loan is a generic name that refers to commercial and personal loans extended to the borrowers. In other words, the installment loans include any loan that is repaid within the schedules installments or payments.
Before you apply for it, you should understand that each payment on an installment debt has a repayment of a given portion of the total principal amount that is borrowed. The main factors that determine the amount to repay include the term of the loan, the interest rate, and the amount of credit.
Types of Installment Loans
Before applying for an installment loan, it is essential to take your time and identify the right type of installment loan that you want. Ideally, there are various types available, and you should pick the right one based on your financial needs. Here are the common types of installment loans that you need to know.
Auto loans are the type of installment loan that is mainly applied when the borrower plans to purchase a car. In most cases, when going for an auto loan, you should understand that it is paid within 12 to 96 months. However, it would help if you remembered that not all lenders have the same duration of monthly payments. Borrowers should understand that a longer-term repayment loan comes with a lower interest rate.
It is crucial to understand that personal loans can be used for various reasons or purposes. Most applicants can go for this type of loan to pay off student bills and consolidate the debt. Unlike other types of loans, personal loans come with a high interest rate.
Mortgage loans are widely known for buying a house. Once you apply and qualify for it, you can take a duration of up to 30 years to repay it. Also, you can set monthly payments and fixed interest rates that do not change.…
Many homeowners find that after some years they require modifications or additions to their house. Many factors can lead to such a need, and they include wear and tear to the house or the family growing and require more space. In such situation homeowners may be in need of some financial assistance. There is a form of financing that can be taken for such situations and this is the FHA 203k loan.
What is the FHA 203 loan?
This is a special provision in the financial industry that gives homeowners a loan based on certain guidelines and the changes or repairs that ned to be made to the house. You can get more information and assistance from the best 203k lender if you are considering this option.
The loan as mentioned above is divided into two categories, let us take a look at them separately.
The Standard 203k loan
The standard 203k loan is an option provided by the Federal Housing Administration (FHA) for more complex renovations or changes that need to be carried out on a house. The FHA keeps a list of the renovations that fall into this category, and they are given below.
- Relocating and moving load bearing walls
- Addition of rooms
- Repairing structural damage to a house
- Property landscaping
It is meant for repairs that exceed $35,000 that need to be carried out on a house.
The Streamlined 203k loan
The repairs that come under this category are minor and for those that are below $35,000. The documentation and paperwork requirements for this loan is easier and loans are dispersed faster.
Here is the list of changes or repairs that come under this category.
- Repairs and replacement of heating and cooling systems
- Repair or replacement of electrical or plumbing
- Replacement and repairs to the roof and associated systems
- Repair to flooring
- Purchasing of kitchen equipment such as ovens, refrigerators washers, etc.
- Interior and Exterior painting
- Window and door replacement and many more minor repairs or upgrades
Where to get these loans?
There are many lending institutions that will help borrowers in getting these loans fast and quick. The contractor who gives the quotation for the repairs or upgrades will have to fund all the changes, and once they are complete, a representative from the lending institution will visit the house and inspect everything to ensure all the changes are done according to the estimates and will then release the funds directly to the contractor.…