Learn how Fairstone’s installment loans work, the benefits of using a loan for debt consolidation, how interest rates are set and more.
What are installment loans?
When you get approved for an installment loan, you receive the money as a lump sum. Then you pay back the loan through a set amount of payments, or ‘installments.’ The time you take to pay back your loan can vary, and is called your loan term.
Secured vs. unsecured loans:
Secured loans are backed by an asset, like the equity in a house. Securing a loan can help you gain access to lower interest rates and potentially borrow more money than you could with an unsecured loan. In contrast, unsecured loans don’t require collateral to borrow money. While interest rates may be higher on unsecured loans, the application process is often quicker. Read this article for a more in-depth explanation on the difference between secured and unsecured loans.
Should I get a debt consolidation loan to pay off my credit cards?
Credit cards charge compound interest – what is usually referred to as “paying interest on interest.” If you’re consistently carrying a credit card balance, you should consider paying off the full balance of your credit card with a debt consolidation loan to avoid accrued interest charges. Try this online debt consolidation calculator to find out how much you can save by consolidating credit cards and other bills into a personal loan.
How much will my loan payments be?
Loan payments vary based on loan amount, loan term, payment schedule and interest rate. Use this loan calculator tool to estimate what your loan payments could be, or request a loan quote for a more personalized result. Change the options to see how the different factors increase or decrease your loan payments.
What are personal loans used for? Are there any fees?
Personal loans can be used for any purpose that requires funds up front, and are most commonly used to consolidate debt. Since you pay back the loan through a set schedule of payments, personal loans can be easier to budget for and often help you decrease outstanding debts faster, saving you money on interest. Personal loans can also be used to help cover urgent or unexpected expenses like home repairs, car repairs, medical bills and vet bills, all of which require money up front.
How do personal loan interest rates work?
Fairstone personal loans use daily simple interest. The interest is calculated on a daily basis based on the outstanding balance (or principle) of your loan. Every time you make a payment, a portion of your payment goes to interest and a portion of your payment to principle. After each payment your balance goes down, and the interest is calculated on your lower balance. Learn how you can use daily simple interest to pay off your loan faster.
How to pay off a loan fast
There are no fees for paying off an unsecured loan early, so here are few simple ways you can pay off your loan faster:
- Choose a bi-weekly payment option. By paying bi-weekly, you’ll make 26 payments a year and can reduce the balance of your loan faster, compared to semi-monthly payments (24 payments a year) or monthly payments (12 payments a year).
- Switch to automatic payments to avoid late or missed payments.
- Round up your payments. For example, if your payment is $278, make a payment of $300 instead.
How to get a loan
Here’s the steps you’ll need to take to get a loan with Fairstone:
- Start with a loan quote: Find out how much money you could qualify for and what your payments could be – it only takes a few minutes
- Finalize your application – here’s a list of the documents you’ll need to bring with you
- Visit your branch and meet with a Lending Specialist to setup a payment schedule and loan term that work for you
How much money can I borrow?
The amount of money you can borrow depends on a few factors:
- Income: We take into consideration your job stability and set you up with loan a payment that’s manageable for your income level
- Credit history: We’ll look at your past borrowing history to determine an appropriate loan amount
- Homeownership status: Homeowners can borrow a larger amount of money if they secure their loan against their house
How are interest rates set?
There are two types of factors that influence interest rates – individual factors that you can control, and economic factors that are outside your control. Individual factors like your credit score, employment status, homeownership status and the loan term you choose are things that you can influence to help you get a lower interest. Economic factors are things you don’t have much control over, and include inflation rate, policy interest rate, prime rate and demand.