Debt Management
Why an installment loan is a good financial choice
When it comes to choosing how to finance a purchase--whether it's car repairs, new furniture, perhaps plane tickets home-- you have several choices. If you have enough money set aside for such things, you can use it. But if you don't, your choices become more important because your financial well being depends on the route you take.
When comparing your options for credit you must consider all the fees associated with each. Consider a military payday loan versus an installment loan. Then consider an installment loan versus using a credit card. The charts below reflect the differences.
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A military installment loan—even one with a subprime rate—can be a more responsible alternative to emergency cash needs than either a payday loan or a credit card. Military installment loans have a fixed payment and terms, which provide you with a lower total cost. Military installment loans also encourage financial discipline. Credit cards, on the other hand, might be easy to use, but there is so much more to consider if you decide to use one.
The truth is, using interest and Annual Percentage Rate (APR) as the main criteria can be misleading. For example, if you make minimum monthly payments for credit cards and an auto loan, you could be paying more than you should. The chart below shows how a debt management loan might have an interest rate as high as the highest credit card, but the monthly payment and total interest paid can be lower and the debt can be paid off earlier. The key is to consider the term of the military loan or credit, along with the interest and APR, to put money back in your pocket.
As you can see, while the interest rate and APR vary, the time to pay off your debt is drastically reduced with a military installment loan and the total amount you pay is lower.
Before you make a choice about how to pay for something, consider the following:
- What is your credit score? A lower score means you'll wind up paying a higher interest rate.
- What is the long-term impact? Remember that the total cost of paying off a loan is the true judge of cost, not just interest rate or APR.
- Avoid payday loans and payday advances. They may seem quick and easy, but they can cost you thousands of dollars in the long run.
Asking these questions before getting a military loan can save you thousands afterward.