Is an Installment Loan right for you?

Deciding on a personal loan is kind of like buying a new shirt. Chances are you have an event in mind at which you will sport said fresh attire: Are you attending a wedding? Painting a house? These require vastly different wardrobe choices. Cost is also a factor. Sure, it looks great, but can you afford it? Personally, my bargain-hunting brain is shriveling at the thought of going to, say, Armani for a plain white T-shirt. (*gasps and clutches pearls*) But maybe the most important aspect is comfort - does it feel right to you? Is it something that you could see yourself in for an extended period? Luckily, we've got the Installment Loan breakdown to help find the perfect fit for your wardrobe...I mean wallet. <div class="section"><img src="https://db4nnybic3xty.cloudfront.net/images/blogs/575/avio_installment_loans_infographic_01.jpg" width="100%" style="padding-top:16px; padding-bottom:16px; max-width:720px; display:block; margin: 0 auto;" alt="average personal loan increase"/></div> ## What is an Installment Loan? An [Installment Loan](https://www.aviocredit.com/installment-loans/) provides a large lump sum up front, which is then paid off in fixed periodic installments most often monthly or bi-weekly. Unlike a credit card or [Line of Credit](https://www.aviocredit.com/line-of-credit/), an Installment Loan [provides funds all at once](https://www.nerdwallet.com/article/loans/personal-loans/what-is-an-installment-loan), so it's helpful in situations where you know up front how much you're needing to spend.<a href="#one">^[1]</a> Installment Loans also typically have a fixed interest rate as well. This is especially useful to keep in mind as you are making payments because your interest rate is typically applied to your *remaining balance* each month. This means that the more you're able to pay off with each installment, the less you'll owe in interest through the life of your loan. Just make sure to read your loan agreement carefully as some lenders may [charge a fee for early payoff](https://www.bankrate.com/loans/personal-loans/what-is-an-installment-loan/).<a href="#two">^[2]</a> *At Avío Credit, we believe saving on interest is a good thing. That means no early payoff fees! Already curious? Check out your [personal loan options](https://www.aviocredit.com/online-loans/).* <div class="section"><img src="https://db4nnybic3xty.cloudfront.net/images/blogs/575/avio_installment_loans_infographic_02.jpg" width="100%" style="padding-top:16px; padding-bottom:16px; max-width:720px; display:block; margin: 0 auto;" alt="how an installment loan works"/></div> ## Types of Installment Loans Even though Installment Loans function in the same ways at a foundational level, there are many different types and ways they can be used. ### Mortgages That's right! A mortgage is most commonly funded by a home Installment Loan. A mortgage is a type of secured loan, meaning that your house is [put up as collateral](https://time.com/nextadvisor/loans/personal-loans/how-installment-loans-work/) to back the loan.<a href="#three">^[3]</a> With a home Installment Loan, you're essentially asking the lender for a large sum of money to purchase your home and then pay them back in fixed monthly installments over a 15-, 20-, or 30-year period. *Note: Avío Credit does not currently offer home Installment Loans.* <div class="section"><img src="https://db4nnybic3xty.cloudfront.net/images/blogs/575/avio_installment_loans_infographic_03.jpg" width="100%" style="padding-top:16px; padding-bottom:16px; max-width:720px; display:block; margin: 0 auto;" alt="total mortgage and auto loan balance changes from 2020 to 2021"/></div> ### Auto loans An auto loan is also a type of secured Installment Loan, but in this case your vehicle is used as collateral. This means that if you are unable to make payments, your car may be repossessed. Retail banks and credit unions offer a variety of auto loan options, or you may decide to go a non-depository auto lender. You typically don't need a down payment to take out an auto loan, but it will [help you save on interest](https://time.com/nextadvisor/loans/personal-loans/how-installment-loans-work/) in the long run if you can manage it.<a href="#three">^[3]</a> *Note: Avío Credit does not currently offer auto Installment Loans.* ### Personal Installment Loans Personal Installment Loans are the most common and typically more flexible type of Installment Loan individuals obtain because the funds can be used for virtually any kind of need related to person, family or household purposes. This can include: * Unexpected medical bills * Home improvement projects * Vehicle repair expenses * Cost of living increases * [Consolidation of high-interest debt](https://www.bankrate.com/loans/personal-loans/pros-cons-of-personal-loans/)<a href="#four">^[4]</a> <div class="section"><img src="https://db4nnybic3xty.cloudfront.net/images/blogs/575/avio_installment_loans_infographic_04.jpg" width="100%" style="padding-top:16px; padding-bottom:16px; max-width:720px; display:block; margin: 0 auto;" alt="top reasons people apply for a personal loan"/></div> Personal Installment Loans are most often also unsecured, meaning that your car or house will not be repossessed if you default on your loan. On the flip side, lenders may charge a [higher interest rate or have additional requirements](https://www.forbes.com/advisor/personal-loans/pros-and-cons-of-personal-loans/) for approval to reduce risk on their end.<a href="#five">^[5]</a> To apply for Installment Loans online, in general you'll need: * To be 18 years of age or older * A valid email address * An open checking account * Valid ID While there are potentially more stringent requirements up front, paying off your Installment Loan consistently over time [may help you build credit](https://www.nerdwallet.com/article/loans/personal-loans/what-is-an-installment-loan).<a href="#one">^[1]</a> Some lenders report on-time payments to at least one of the three major credit bureaus - Equifax, Experian, and TransUnion - meaning good things for your credit history. *Not super thrilled about your credit score right now? You could still be approved with Avío Credit! [Apply now](https://secure.aviocredit.com/LoanApplication/Account) to find out.* ## So how do I know what's right for me? If you're needing a one-time sum of money up front and have the financial means to make consistent payments over time, then an Installment Loan could be a great option for you. If you're looking for even more flexibility and access to funds, you might consider a [Line of Credit](https://www.aviocredit.com/resources/574/personal-loan-facts/how-does-a-line-of-credit-work). No matter your situation, Avío Credit is dedicated to helping you find the right fit. Still have more questions? [Give us a call!](https://www.aviocredit.com/contact-us/) Our 100% online loans mean all the support of a store with no embarrassing fitting rooms. ### Sources <div id="one">^[1] Millerbernd, Annie (2022, February 8). *What Is an Installment Loan?* Retrieved from: [https://www.nerdwallet.com/article/loans/personal-loans/what-is-an-installment-loan](https://www.nerdwallet.com/article/loans/personal-loans/what-is-an-installment-loan) <div id="two">^[2] Taylor, Mia (2022, June 21). *What is an installment loan?* Retrieved from: [https://www.bankrate.com/loans/personal-loans/what-is-an-installment-loan/](https://www.bankrate.com/loans/personal-loans/what-is-an-installment-loan/) <div id="three">^[3] Cortez, Joe (2021, January 6). *How Installment Loans Work.* Retrieved from: [https://time.com/nextadvisor/loans/personal-loans/how-installment-loans-work/](https://time.com/nextadvisor/loans/personal-loans/how-installment-loans-work/) <div id="four">^[4] Lusk, Veneta (2022, June 29). *The pros and cons of personal loans.* Retrieved from: [https://www.bankrate.com/loans/personal-loans/pros-cons-of-personal-loans/](https://www.bankrate.com/loans/personal-loans/pros-cons-of-personal-loans/) <div id="five">^[5] Treece Kiah & Tarver, Jordan (2021, May 29). *Pros and Cons Of Personal Loans.* Retrieved from: [https://www.forbes.com/advisor/personal-loans/pros-and-cons-of-personal-loans/](https://www.forbes.com/advisor/personal-loans/pros-and-cons-of-personal-loans/)