When the need for extra income source arises and your cash balance is not enough, installment loans can offer a great solution. Regardless of whether you seek for additional funding that covers emergencies such as medical or family emergencies, or is looking to buy something that makes your life simple, you want to reduce the cost as much as you can.
Sometimes you will not succeed in getting friends or family to lend money to you at zero interest, but online lenders, banks and credit unions can sort you out on installment loans for bad credit.
These are a form of consumer credit, which exists in three forms – installment loans, revolving credit, and short-term loans.
The major source for revolving credit is credit card payments, short-term loans come from payday loans, and installment loans come from credit unions and banks.
In short, they are loans that you repay over time through set payments that you schedule in advance, and the usual is making two payments towards the loan.
Traditionally, people tend to avoid installment loans because they view credit unions and banks as inconvenient ways of getting loans, so they only get them when dealing with purchases if larger amounts such as the mortgage or cars.
However, the situation is different today – online lenders are now offering a simpler way of getting installment loans for bad credit, leading to an increase in their popularity.
Installment loans are of two types – closed-end loans and unsecured/secured loans.
The cost usually comprises of installment charges, as well as other applicable fees. The agreement between you and the lender should explain the terms of the contract, as well as the charges and fees.
In addition, U.S. law requires that the lender put all charges in terms of dollars and factor in APR (Annual Percentage Rates).
Installment loans are not applicable in all states. However, if it is applicable in your home state, the lender will factor in your credit history and income level to determine your qualifications and the limits that you can borrow. The state laws can also determine the maximum and minimum amounts that you can borrow.
When applying, you complete a loan application form and submit it with extra information like verifying your income, checking bank account information and your identity.
Credit unions and banks may refuse to lend money to many borrowers, resulting in the next solution – short-term lenders. However, there is no difference between short-term installment loans and payday loans.
You can receive your money instantly, which is nice – but this often comes at a heavy price because of the frequency of due payment days (only a few days apart) and the high rates.
These are, more often than not, the first source of installment loans. They offer them for many users, including car loans, student loans, mortgage, and personal loans.
A disadvantage with banks is particularly in giving unsecured loans, it gets even stricter; banks keep very rigorous credit requirements to approve borrowers. If you have marginal credit, you will need a trustworthy co-signer to help in your application.
The other problem is the long process of loan applications. It takes even weeks or months before you get the finances, and that is only if you qualify in the first place. For this reason, they may not be a viable option when you are seeking an instant solution.
The key thing to understand is that many direct lenders of installment loans for bad credit will focus as much on your credit score as they will on your ability to repay the loan. The credit score may bring to the surface some of your financial struggles from past times. But, what will also be closely examined is whether you have a steady income source and a valid bank account.
Some of the features of an installment loan that may interest you are as follows:
Please note: Installment loans are not the only solution to address your financial difficulty. There are many other options worth exploring, such as credit protection on your checking account. However, if you do decide to go for an installment loan, then understand that we are not direct lenders of such loans.
We are not involved in any decision making or influencing the decisions of lenders. We are also not responsible for their actions or decisions. We are simply providing information. We always recommend that you thoroughly understand the terms and conditions of the lender that you plan to work with.
Installment loans are a good option to have, but bad credit may hinder you from getting the service. For this reason, various online lenders have come up to provide the service, and you can seek the loans as long as you confirm that you have a steady income and bank account.