A personal installment loan is essentially an amount you borrow and then pay off in a designated period. Sounds basic, but that’s the entire point. After all, they are the most standard loan type out there.

Now, why don’t we walk through some of the finer details?

What’s a Personal Installment Loan?

A personal installment loan is a type of debt where an individual borrows a specific amount and pays it back in installments. Unlike other types of loans, these are typically unsecured, meaning you do not have to put up collateral.

Some other defining features are as follows:

• A personal installment loan is closed-end, i.e., you get the entire amount at the very beginning
• Payment installments remain fixed over the designated repayment tenure

Personal installment loans are excellent to tide you over major financial decisions. Planning on buying a car? Go for a personal installment loan. Need to pay off your college tuition? You get the idea.

Besides that, these loans are relatively more flexible with their amount and repayment tenure, both of which can be tailored to fit your specific needs. Of course, there's also the fact that they usually come with lower interest rates.

Before going further, let's clear up any confusion regarding a personal loan and a personal installment loan. A personal loan is one of the many types of installment loans available. Personal loans are repaid over time in the form of installments, which is why they’re also sometimes referred to as personal installment loans.

How Can You Apply for a Personal Installment Loan? 

Now that you know what’s a personal installment loan, it's time to understand the critical factors you need to consider before committing to such financial obligations. In most cases, lenders will examine the following before they approve such a loan:

• Your credit score
• Your current income
• Any existing debts or financial liabilities on your end
• The amount you need and the payment tenure

Depending on the factors mentioned above, the terms and conditions and, in some cases, even the amount can change significantly. For instance, if you are a student with no fixed income, the amount you can borrow may be lower than what a working professional with a spotless credit score can.

Apart from that, there is also the possibility of you borrowing an amount you do not need. In other words, you could end up with a loan of 5 lakhs when you just needed 2 lakhs.

That could lead to additional problems down the line when you have to pay off the interest on the principal amount. And, if you miss one or are late, it could damage your credit score, making you less likely to receive loans in the future.

To summarise

With Fi Money, you can get pre-approved personal loans for up to ₹5 Lakh instantly. 

Merely register on the app, apply for the loan, and, after verification, the amount will be credited directly into your account. You could even set up automated in-app payments to avoid late charges.

The best part? All of this takes 5 minutes or less. 

Frequently Asked Questions

1. Is it wise to opt for an installment loan?

A personal installment loan is an excellent option in most cases. These loans help you avoid breaking into your savings to fund a major purchase. And since they come with fixed monthly payments, repaying them is fairly easy.

2. What is an example of an installment loan payment?

One example of an installment loan is a home or mortgage loan. These are secured debts, meaning you put the item of purchase (in this case, the home) up as collateral. Conversely, taking out a loan to pay off your college tuition would be an unsecured debt, i.e., you do not have to put up any collateral.

3. How does an installment loan differ from other types of loans?

An installment loan differs from other types of loans in that it's repaid over a set period in fixed, regular installments. Each payment includes both principal and interest, allowing borrowers to budget effectively. Other loans, like credit cards or lines of credit, often have variable payments and no fixed repayment schedule.

4. What are the typical repayment structures for installment loans?

The typical repayment structures for installment loans include:

1. Equal Monthly Payments: Borrowers make fixed monthly payments throughout the loan term, with each payment covering both principal and interest. This is the most common structure.
2. Amortization: Payments are structured so that more of each installment goes toward interest at the beginning of the loan term, gradually shifting to pay more principal toward the end.
3. Balloon Payments: These loans have lower monthly payments during the term but require a large "balloon" payment of the remaining balance at the end of the loan term.
4. Biweekly or Weekly Payments: Some installment loans offer more frequent payment options, like biweekly or weekly, instead of monthly payments.