Revolving lines of credit can be convenient, but they often turn out to be costly, as well. Making good use of installment loans, where appropriate, can be an excellent way of keeping costs down while also building up greater financial discipline. While it might be tempting to pull out a credit card at the first sign of trouble, planning ahead just a bit more and seeking out a loan to be repaid in installments will often make a lot more sense, in the end.
As the name suggests, a loan that comes with the obligation to make set, defined payments at regular intervals will normally fall into this general category of lending. While there are other loan types that add different features to this basic arrangement, thereby changing the fundamental nature of the financing, the average loan of this type will be among the easiest of all kinds of lending to understand.
Unlike revolving lines, where only a certain, set minimum needs to be paid each month and a balance could otherwise remain for an indefinite amount of time, a loan of this kind will include a set, definite term. As a result, it typically becomes much easier to budget for the satisfaction of the associated requirements, as well as to plan for the day when the loan will finally be paid off.
There are other advantages beyond these most obvious ones, as well. For one thing, loans of these kinds will typically carry lower interest rates than are usual with revolving credit, since lenders can themselves have a better idea as to how and when things will finally be resolved. For another, borrowers will sometimes find that qualification standards can be looser, particularly when some form of collateral is put up as a condition of the borrowing.
For these reasons and others, many of those who normally default to their credit cards might do well to look into this other form of lending, instead. While it will often take a bit of planning ahead compared to simply pulling an existing card from a wallet, borrowing of this kind can turn out to be quite a bit less expensive and much easier to manage.