The data indicated that the annual sales of loans from banks and credit unions have been oscillating around 8 million – 10 million contracts for a long time. Most of this sale is generated by cash loans. However, installment loans, which are also relatively popular, should not be forgotten.
The distribution of these loans is often done by online and stationary stores (mainly hypermarkets) cooperating with banks. These sellers tempt you to arrange a loan in the store and immediately buy the item you need. This perspective is undoubtedly encouraging. However, it is worth remembering that the installment loan will be less flexible than a traditional cash loan. Such a loan is also much more expensive than free non-bank loans, which are quite a lot on the market.
Instantaneous and cash loans are flexible options
Before we discuss the pros and cons of installment loans, which are not the best solution, let’s discuss other options for financing items. Cash loans and non-bank loans also allow you to finance eg a laptop or a new TV set. The situation is facilitated by the fact that most non-bank loans can be obtained quickly online. The number of banks offering online cash loans is also increasing.
Installment loan only for a specific purpose
First of all, it should be emphasized that an installment loan for a consumer, unlike a cash loan, has a specific purpose. It’s about buying a specific good or service. Importantly, the exact name and value of the good / service will be mentioned in the installment loan agreement. This means, among other things, that you cannot borrow a larger amount that would allow you to buy additional equipment for an item in another store (eg a meter, water bottle and bicycle helmet).
The installment loan offer is not large
For a long time, people interested in an installment loan can apply for it online (via the online store). The problem, however, is that the offer of installment loans in an online store or stationary store is usually not wide. It may turn out that the buyer of a good or service has only one offer to choose from. Such situations result from the fact that the current market offer of installment loans is quite narrow. The market is dominated by several banks specializing in installment lending for purchases. Due to the lower competitiveness of the market, installment loans are often more expensive than the cash equivalent offered by the same bank.