How Many Installment Loans Should I Have

by Andy Hough on August 14, 2014

Installment loans are a typical part of every adult’s life. Even if there is enough cash to go around, to pay upfront for everything you need in life, installment loans still happen. These do help to build credit but at the same time, can be detrimental to your credit score should you default on the loan. These types of loans do have interest attached to them, which varies depending on your credit score at the time of the loan being taken out.

Traditional Installment Loans

Any time that you purchase a home, vehicle or take out an equity loan, these are installment loans. Even a quick cash title loan is an installment loan. This means that based upon your credit score and your income level, a creditor can extend a loan in a specific amount of money to be paid off over time.

These payments are setup on a monthly basis and have a minimum amount due. Paying the minimum only does help to show that regular payments are being made, but it doesn’t help speed up repayment. Consider paying more than the minimum amount due to pay down the loan faster. In terms of how many to have, a house payment and a car payment are sufficient. Some consumers can handle an equity loan, mortgage and vehicle payment.

Revolving Credit Installment Loans

Revolving credit is another name for a credit card. These are a type of installment loan that gets consumers into a lot of trouble.  In regards to this type of installment loan, one, perhaps two is beyond sufficient. The more plastic you have in your wallet, the more debt you accumulate. This type of credit replenishes itself as long as you are able to continue paying on the cards, there really are no limits on the number of credit cards that you can have. It is important to not cross your own financial thresholds.

Installment loans are created in a variety of ways. The more you have, the thinner your household budget gets. Keep installment loans to a minimum where possible, outside of the necessary mortgage and car payment loan types. Living outside of your means is a recipe for financial disaster. It is up to you to be keeping track of what payments are going out and what each totals. Paying on time or early is a must. Only borrow what you can comfortably pay back is the general rule.

{ Comments on this entry are closed }

Rolling Over a 401k or IRA to a Betterment IRA

March 13, 2014

If you are thinking about rolling over your old 401k to a Betterment IRA to take advantage of their low investment fees the process is pretty simple. They use the direct rollover method to transfer the old 401k to the IRA. For a 401k the first thing you need to do is create an IRA […]

Read the full article →

Buying a New Life: How Much Do I Need to Retire?

December 19, 2013

If you’re not counting down the days until you can retire, you’re surely counting down the dollars. Most people spend the majority of their working lives stacking one dollar atop the next, hoping that their efforts will one day guarantee them a stable future in which they do not have to wake up before 10 […]

Read the full article →

Can Investing be the Key to an Early Retirement?

December 19, 2013

An early retirement is something that we all crave. Saving for an early retirement, however, is much harder than you’d originally imagine and with the cost of living rising, it is becoming harder than ever to secure an early retirement that will see you through the rest of your life. For this reason, many people […]

Read the full article →

Three Reasons Young People Should Care About Social Security

September 11, 2013

There are millions of high school and college students that are searching for jobs.  Whether a new worker is beginning the career of a lifetime or just earning some extra money for the school year to come, there is one question that is likely to be on each new worker’s mind when they see their […]

Read the full article →

Ruling Affects Retirement Benefits for Married Gay Couples

July 1, 2013

Married gay couples should take a closer look at their Social Security benefits and their Individual Retirement Accounts. Last Wednesday, the Supreme Court ruled the Defense of Marriage act unconstitutional. Now that the Act denying federal benefits to legally married same-sex couples has been struck down the retirement benefits of married same-sex couples will be […]

Read the full article →

The 7 Deadly Retirement Sins

June 25, 2013

I was provided with a free copy of the book, The 7 Deadly Retirement Sins to review. Since the book is about retirement and this a blog about retirement the book seemed like a good fit and after reading the book I can say it will be of interest to many of the readers of […]

Read the full article →

Two Free Retirement Books

June 3, 2013

Mike Piper of Oblivious Investor, is offering the Kindle version of his book, Can I Retire? , for free until Wednesday. If you want the paper edition the cost will be $5. This is a new edition of the book. He states that if you already own the book you don’t really need to get […]

Read the full article →

Take Advantage of a Stretch IRA

May 22, 2013

When you go to open an IRA account you will probably find that there are several variations. One variation of an individual retirement account (IRA) is a stretch IRA.  This concept is used to pass the proceeds from an IRA to younger generations rather than to your spouse or peers.   IRA owners must begin receiving […]

Read the full article →