If you consider investing and expanding your business or growing your working capital, you have several options to choose. You can apply for a traditional secured/unsecured loan, a line of credit or choose the installment loan. The latter has a lot of advantages for small business owners that help them get fund quickly and under simple terms.
How Do Installment Loans Work?
An installment loan (also, a term loan) is a regular type of a loan. This means you will receive a lump sum that you eventually repay in fixed periodic (usually monthly) payments. The periodic amount is calculated in the way that it already includes both the loan and interest. Compared with other types of financing, installment loans have an easy-to-understand system that does not confuse you with the time.
As soon as you sign the contract with your lender, you get the full funding. The lender calculates the interest from the day the money got transferred to your bank account and stops on the final day of the loan repayment.
These loans are acceptable for business purposes. The mortgage and auto loans are also considered as installment credits. They can be used for purchasing a business building or vehicle. Financial specialists from Personal Money Service recommend to think about this type of a loan if you want to purchase a business asset because the repayment terms correspond to how long the asset usually lasts. In other words, you get a vehicle and repay a car loan for 5 years, which is also an average time for owning the car before selling or trading one for a newer option.
What Do You Need to Get an Installment Loan?
Getting an installment loan is a risky thing for a lender because a borrower doesn’t secure the loan with any asset as collateral. Hence, they want to secure themselves with stricter requirements. If you are about to launch your business, here is what you need to get an installment loan for sure:
- Have a very good credit score;
- Find a co-signer for the extra security;
- Prepare a comprehensive business plan;
- Negotiate with the lender who may ask for additional guarantees.
The theory is read, conditions are reviewed – time to find a reliable installment loan provider that provides loans at fair terms and interest rates. Let’s stay away from traditional banks and credit unions for today and dive into the world of online lending services and how they work.
#1. Online Loan Brokers
A loan broker is a paid service that helps you find the most suitable loan for your situation. The good thing about online loan brokers is that you pay only in case you accept the offer. Also, you save a bunch of time that you will spend searching for the applicable loan on your own.
On the other hand, brokers may charge you more than they actually cost. They rarely find a loan with a low-interest rate to pay off their services. Perhaps, that’s why, with the emergence of online lenders and financial companies, loan brokers lost their value on the market.
#2. Loan Aggregators
What kind of financial companies replaced online brokers these recent years? Loan aggregators’ services are free. In fact, they get paid by lenders who find customers through such matchmaking services. You just fill in the application form and based on your information and the service chooses you the suitable lender.
The benefits of such services are numerous. You do not pay a penny for the matchmaking service but at the same time you save time and secure a very good deal.
Make sure the loan aggregator is a reputable service with a positive customers feedback. To compare lenders and matchmaking services, use online reviews.
#3. Online Reviews
If you didn’t know, there exist many websites that review services in a convenient manner. First, you do not get charged for using the reviews. You need to visit the site and review the top 3 best lenders in the USA. Select the most suitable option based on their key features and rating.
If you are still not sure whether you need an installment loan for your business, read the article one more time and change your mind. This is a perfect option for making your business grow. Just make sure you turn to a trustworthy lender. We recommend you using the reliable matchmaking services to avoid high-interest rates and other issues in the future.