The installment loan, as well as the consumer loan, are financial products that make it possible for a person applying for cash to get it. The differences between them are quite subtle and both products have both pros and cons.
Loans for a specific purpose
Lending is reserved only for banks, as this financial product is directly governed by the Banking Law. This means that both parties to the loan agreement must comply with certain laws.
This gives a number of collateral to the borrower, but also to banking institutions. The bank must publicly disclose all information and incurring liabilities is only valid under written pain. Consumer credit, like any other, is granted for a predetermined purpose. It can be the purchase of new home appliances, trips, and even the financing of holidays. The bank will grant a loan for this purpose and this should be observed.
The maximum amount that a borrower can receive in the case of a consumer loan is quite high and amounts to just over a quarter of a million dollars. All bank fees and interest have an upper limit, which is legally recorded. You can withdraw from the loan agreement within 14 days. Received money is always transferred to the customer in the form of a transfer to a bank account. Importantly, they are the property of the bank, not the borrower, so they are not subject to bailiff’s seizure.
What is an installment loan?
An installment loan can be granted by anyone – bank, parabank or natural person. The repayment is made in installments, as in the case of a loan. Product-related loan installments can only be found in the Civil Code.
The goal is not defined in advance and the money can be spent completely differently than the borrower had originally anticipated. The amounts borrowed are usually quite low and reach a maximum of several thousand dollars, however the amount of interest and costs depends only on the person providing such financial assistance. Some companies offer a free first installment loan or no repayment date.
In the case of loans, this does not happen. However, be careful, because as a rule, interest rates are very high. The installment loan can be transferred in the form of a transfer or cash, and the money immediately becomes the property of the borrower.
What should you decide?
There is no single answer to the question which form of financial support is better for the client. This requires analyzing many factors. Banks when granting loans quite heavily x-ray the borrower in the Credit Information Bureaus and assess the ability, taking into account the mass of factors. All this means that getting this financial product is not easy. Loan companies often do not have such stringent requirements and provide “proof” support even in 15 minutes.
On the other hand, in such institutions, the real interest rate may even be several thousand percent per year, where in banks it is on average about twenty percent. You can always look for a lender offering a promotion for free financial assistance. In banks, there would be no such searching.
Consumer credit is safer but harder to access. It may also discourage the need to specify the destination of money in advance. The installment loan is much more customer-friendly, but it can lead the consumer into even greater financial problems. Regardless of the form of the financial product, you should always read carefully all contracts describing the money borrowing process.