Americans have accumulated $1.47 trillion in student loan debt. Much of this debt is in the hands of borrowers who are just starting out in life, recent graduates who are attempting to pay for these student loans on a salary that ranks at the bottom of their respective fields. Does a college education still pay? Sure. Unfortunately getting ahead with a degree is going also going to cost you, especially when you first begin your career.
College graduates are concerned about how to tackle this formidable debt while still getting that first home or car. To get a great start in life and have all those “American dream” purchases, you have to maintain a solid credit rating, and that involves paying off loans on time and keeping up with those still loan payments. Installment loans have become one of the most effective ways for students to pay off a larger chunk of their student loans at once while still paying reasonable payments that won’t affect whether the student loans go into default.
Installment Loan Overview
Unlike payday loans where a person pays off a short-term loan in two weeks to a month, installment loans are longer-term loans that are paid off in around 8 months (this can be flexible, depending on the lender you work with). Interest rates on installment loans may be a bit higher than some personal loans, but they are not as high as payday loans, and they don’t require you to repay the loan in such a short period of time that it won’t give you an advantage in paying off student loan debt.
You usually have flexible payment options with an installment loan. For example, you can pay monthly or bi-weekly. If you pay bi-weekly, for example, you would have 16 installments, but you would also have longer to repay the loan and get your finances in order. It’s a simple, two weeks or one month at a time loan that lets you take your installment loan and pay off a larger portion of your student loans at once, moving you away from the dreaded default that so many students can’t afford to face.
A good lender works with you on your installment plan before you ever sign on the dotted line. When looking into the installment loans Delaware offers, the lender will not want you to take out a loan that isn’t going to actually help your situation. There are times when an installment loan will be the right choice for you and other times when it won’t be the best option. A great company is going to really assess your situation and make sure that you don’t take out a loan that just isn’t right for you.
How Installment Loans Help Student Loan Debt
There is so much student loan debt in the United States right now that it’s one of the crucial issues facing the credit system going forward. Some students graduate college $250,000 or more in debt, not quite knowing how to tackle that amount with an introductory level job. Installment loans are the ideal scenario for students who need to make a large student loan payment or want a little breathing room away from the prospect of defaulted student loans.
For example, a former student who is behind on payments might want to take out an installment loan to catch up on their student loans and keep the loans safely away from the prospect of default. An installment loan also might help a former student get ahead on their student loan payments so that they only have to worry about paying off the installment loan itself. By putting your payments into “bite-sized” manageable chunks every two weeks or every month, installment loans are easy to keep up with.
Interest rates vary per lender, so it’s always important to make sure that you look at those interest rates and really see if they’re wise for you. In the early going, installment loans don’t negatively impact your credit rating due to the fact that they’re naturally high amounts in the beginning. And as long as you keep up with your payments, they also don’t negatively harm your credit rating, but if you get behind, they can affect your score, and that’s something you want to discuss with your lender to make sure that their policies are fair and the interest is acceptable to you.
Because installment loans are a bit shorter-term and smaller than most personal loans, you’ll find that they’re easier to qualify for than personal loans. Students who might have a few blotches on their credit record will find that as long as you have the income and ability to repay your installment loans, you’ll likely be approved for this type of loan. Any current or former student struggling with student loan debt should look into the possibility of applying for an installment loan.