Installment Loans Online for Good or Bad Credit

In the modern economy, consumers can work hard, budget, and even save. Despite their best efforts, however, consumers sometimes come up a bit short. Fortunately, a short-term financial problem does not have to turn into a long-term dilemma. There are numerous financial products available today that can help consumers bridge the gap. One of the most popular financial products is an installment loan.

What Exactly is an Installment Loan?

This loan type is a financial tool that is paid off in fixed payment terms. Terms will require monthly payments that include principal and interest until the loan is paid off. They are popular because they come from a variety of direct and indirect lenders and can be applied for, processed, and funded in a very short period of time.

What are Some Common Types of Installment Loans?

This longer term finance option comes in a wide variety of shapes and sizes and may be funded through a direct lender non-direct option known as a matching service. Many of the most common forms of financing today are fixed payment loans. Some are made on a short-term basis while others are considered longer term options. Some of the most widely used financial products include:

• Mortgages
• Auto loans
• Student loans
• Personal loans

In addition to the above, they may be used for a variety of other purposes. These types of loans may be used to fund larger purchases for many different types of items such as boats, vacations, collectibles and more. They can also be used for things like home repairs, remodels and investments. Loans to purchase businesses and even student loans also fall into this category. There really is no limitation on what an installment loan may be used for.

Who offers these popular financial products? 

Installment loans can be obtained through traditional banks, credit unions, private lenders, online companies, and other financial institutions. The type of lender a borrower may use can depend on numerous factors including the reason for the loan, the length of the loan, the total loan amount, and more. So-called crowd lenders have become increasingly popular in recent years. These lenders may have less stringent approval requirements and their loans are funded by numerous investors. A single loan from such an institution could have several hundred investors involved, thus decreasing the default risk for the investors.

Is Good Credit Needed?

The process is easy and will almost always require a hard credit check. Lenders will look at overall credit scores as well as payment history and other factors. Good credit requirements can vary from lender to lender, but generally speaking, borrows will need a fair to strong score to get approved for any type of unsecured loan. Loans that are secured with some form of collateral may have slightly lower credit standards. These circumstances are more guaranteed types of loans than unsecured loans. There are some financial products available with no credit check, but they may be costlier due to the higher risk of default.

Can Someone get a fixed payment loan with bad credit? 

Getting approved for an installment loan with past issues containing poor credit can be very challenging, but it is possible to get approved without a credit check. In fact, some lenders specialize in these types of loan products for bad credit. Traditional lenders may also be willing to lend to those with less than perfect credit. A bank or credit union, for example, may be willing to lend to a sub-prime borrower if the borrower puts some money on deposit in a savings account or certificate of deposit (CD). Borrowers with poor credit who get approved in this fashion may then be able to use the loan to establish more good credit. Of course, the borrower will need to make sure that all required payments are made on time and that the terms of the loan are fulfilled. There are also bad credit payment loans that are sometimes referred to as guaranteed loan approvals. These loans are made by lenders that pledge to loan regardless of credit. Guaranteed or bad credit advertisements from lending companies usually carry higher interest rates or fees due to their higher risk of default.

Am I eligible?

This type of loan can be applied for with good credit, poor credit, or on a lower income as long as you are able to afford the payments. Generally, lenders will look at your income, credit history (a lot of times just a background check), employment, and checking account information to determine your eligibility for a loan. Keep in mind that these types of lending products are not legal in all states, so your residency will also have a bearing on your application.

How to qualify and apply?

Approvals can be obtained through both brick-and-mortar banks and lenders as well as from direct lenders online. Whether you apply online, or in a physical location, you will need some basic information to submit an application. Some of the basic pieces of required information include:

Verifiable income. This doesn’t mean you need to be employed. Some lenders accept alimony and pension as income.

An active checking account. If you don’t have a checking account, you can sometimes catch an approval from a local brick-and-mortar storefront. Just about every lender today will require an electronic account.

Government-issued identification. Lenders might ask to see your driver’s license to verify that you meet the age requirements.

Applicants with good to excellent credit scores are usually approved for higher amounts through our network. That’s because many lenders use underwriting software that relies heavily on your credit history when determining your eligibility. Poor credit is also acceptable.

How do repayments work on an installment loan?

Repayment terms differ depending on what type of loan you apply for. Generally, the following will apply:

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What can I use an  installment loan for?

You can generally use them for any legitimate purpose. However, it might be best to save it for emergency situations since they can come with higher interest rates than other types of personal financing. You can use this financial product for things like:

Medical expenses. Sometimes healthcare providers don’t provide financing that all patients qualify for. A short financing options can help make paying it off more manageable. With our healthcare system leaving us with expensive premiums and out of pocket expenses, grabbing an online funding solution can make a huge difference in making sure those unexpected medical bills are paid.

Building or car repairs. The cost of repairs that need immediate fixes can help to be covered with an installment financial product, no mater what your credit type is. This can range from unexpected housing repairs: furnace, hot water heater, A/C, to vehicle repairs, faulty transmission, alternator, maintenance, etc. There is no limit on what you can and cannot use the funds for once approved.

Overdue utility bills. This financial tool can help you keep the lights on, water running, and phone line working when you don’t have the funds to make payments on time. These utility companies are rarely sympathetic and usually want their money when its due. Now you have a financial tool that can help.

Building your credit. Taking out an installment loan can help you rebuild your credit if you make payments on time. Typically this type of loan is reported to the credit bureaus and can help to show responsible payment history and start to bring your credit score up. This can be a huge builder going into the future with a more solid credit report and payment history to bring better interest rates and terms on your next loan.

Some lenders may require substantiating pieces of information as well such as paycheck stubs or bank statements. If you are applying through a bank or financial institution, you will oftentimes get an answer right away or in very short order. If you are applying through a crowd lender, you may then need to wait the necessary time until the loan is fully funded by investors.

What Might Typical Terms Look Like? 

Installment loan terms can vary greatly by lender. The majority are made with a fixed interest rate. This means that the monthly payment amount will be the same for the duration of the loan. This allows borrowers to budget appropriately and keep their loans current.

The length can also vary greatly depending on the loan type and use. A traditional fixed-rate mortgage will typically have a duration of 15 or 30 years. A smaller auto loan, however, may range from two years to six years in length. Generally speaking, unsecured loans with longer tenures (6-60 months) will charge more in interest compared to short-term loans.

The interest rate charged, or annual percentage rate (APR), can have a wide range depending on the loan type, purpose, lender, credit worthiness of the borrower, and other factors. A mortgage loan, for example, typically carries a much lower interest rate compared to a loan for a boat. This is because mortgage loans are secured by the property being financed, and thus the lender can eventually foreclose and sell the property if the borrower defaults.

Mortgage rates can vary depending on many factors, including current prevailing interest rates. Over the last decade or so, mortgage rates have been in the low single-digits depending on the type of product being used.

A non-secured loan, like from a crowd funding lender, local bank, credit union, or an online lender may carry a significantly higher rate of interest. These rates can often range from eight to over 36% annually. The higher interest cost can be attributed to the loan carrying more risk for the lender and its investors. Because such loans are typically unsecured, the lender has no simple recourse if the borrower defaults.

Are these financial products Safe? 

Financing through reputable lenders are typically very safe. A good lender will take the necessary precautions to protect you, and other anyone else who has data in the deal and will maintain privacy throughout the transaction. Loan proceeds are typically paid by check or direct deposit (wire transfer, EFT), so there is no risk of walking out of a branch office with a wad of cash. As with any other financial transaction, you will want to take the time to do some research and perform your own due diligence before borrowing.

Watch out for predatory lenders

Installment loans are not just for people with bad credit, although you wouldn’t know that if you only did a quick Google search. That’s because some subprime lenders repackage what they would have previously called a payday loan as an “installment tool” in an attempt to appear less risky.

Like payday loans, these fixed rate products tend to come with extremely high interest rates and have similar features that can act as debt traps. But you can usually avoid them if you know what to look out for:

Guaranteed approval: Lenders that guarantee you can get a loan through them before you apply are not looking after your best interest. Most reputable lenders want to make sure you can pay off your loan first before telling you you’re accepted.

Upfront fees or payments: Reputable lenders that charge application or origination fees don’t ask for payment until after your loan is disbursed. Anything else could be a scam.

Pressure to borrow more than you need: Taking out more than you need means you’ll be on the hook for more interest. A lender that pressures you to take out more doesn’t have your interests in mind.

Insurance add-ons: Some lenders push insurance options that sound like they protect you, but really protect them in the event that something happens to you that affects your loan repayment (like death). Lenders typically don’t include this in their APR — even though it’s technically a fee — and use it as a way to get around state regulations on how much they can charge.

The lender approached you: Getting a lot of texts from or robo calls from a lender? It could be a scam. At most, legitimate lenders might send you a letter or two in the mail. Run away if you feel like they’re pressuring you into taking out a loan you don’t really need.

Can Lenders be Compared?

Installment loan lenders can be fairly easily compared. Some of the key points of comparison should be length of time in business, interest rates and fees, customer reviews, and more. Making a direct comparison between rates and fees can be a bit challenging, however, as some lenders do not apply the rate of interest until after the loan is approved. In this case, you may be better off comparing rate ranges between lenders based on loan type and duration. Doing a little bit of research can be very helpful in finding the best solution for you.

What if you cannot repay or become delinquent? 

Lenders will expect that monthly payments be made consistently and on time. If for any reason a borrower cannot make a monthly payment, lenders may contact the borrower to find out what is going on. If a payment is late, the lender may also charge a late fee and report the payment as late to the various credit reporting bureaus (TransUnion, Equifax, Experian). The most important thing if a borrower is unable to pay, is to become proactive and contact the lender as soon as possible and let them know what is going on. Lenders do not want clients to default and are often willing to work out a plan if the borrower is doing their best to make good on the obligation. Avoiding the lender can lead to more aggressive collection strategies and higher costs.

Can an Installment Loan be Paid off Early?

The answer is yes in most cases. Most do not carry what is known as a pre-payment penalty that penalizes the borrower for paying off the loan early. The loan agreement should spell-out for the borrower if any pre-payment penalties exist and if so, how they are structured. This type of loan requirement is more out dated than actually used. Most lenders today don’t mind paying off the debt early.

Borrowers can save a great deal of money by paying off the loan early. This can be accomplished by paying extra money directly towards the principal each month or by making extra lump-sum payments. Basically, the shorter the duration of the loan, and the smaller the loan balance, the less interest that will be paid.

Is this a better alternative than credit card advances? 

The answer depends on numerous factors. The short answer is yes. A short-term financial difficulty requiring a relatively small amount of capital may be best served using a credit card advance. A larger loan or a lengthier duration, however, may require fixed payments to keep costs lower or make payments more manageable. Cash advance interest rates are determined by the credit card issuer and are usually significantly higher than the rates charged for purchases. If the cash advance rate on a credit card is 26%, for example, a borrower may be better off obtaining a fixed rate loan at a lower rate.

Installment Product Pros and Cons

Pro’s:

Build Credit: This product will typically require lenders to report your payments to the credit bureau’s, thus helping to improve your credit score.

Fast turnaround time: Our network of 100+ lenders tend to process your application very quickly, sometimes in minutes. If you accept the loan contract, you can get your money as soon as the following business day.

May not require collateral: With not having to back the loan with collateral, all you have to do is sign your signature and the funds are directly deposited.

Bad credit applicants are accepted: Conventional loans normally come with stringent lending criteria, but most employed people can consider applying for installment loans with poor credit, as long as they can show their ability to repay the loan.

More manageable repayments structure: Unlike short-term loans or cash advance loans that you have to repay by your next payday, you can take longer to repay your newly acquired fixed rate loan. Our nationwide lending network may even give you the ability to choose between making payments once or twice a month.

Cons: 

Fees: Normally charge higher fees and interest rates, especially in comparison with more conventional forms of credit. Keep in mind this is an unsecured loan and does not require any collateral to put up in order to get it.

Higher repayments due to higher loan amounts: Borrow modestly by repaying responsibly. This product comes with higher loan amounts than standard payday loans. While you have lower ongoing repayments because you’re paying it back over time, repayments can still be expensive. Make sure it’s manageable on your budget before you sign up.

Total loan cost: The APR can still be quite high, resulting in a high total overall repayment.

Modern loans can be made for a wide variety of reasons to a large number of borrowers. Because of the way these financial products are structured, borrowers can make sure that they can afford the necessary monthly payments before taking out the loan. These type of loans can represent the most cost-efficient way of obtaining capital for large purchases while also helping the borrower build a positive credit history.

What are the benefits? Are they Guaranteed Approvals?

Installment loans come with various features. Here’s what you should know if you’re considering applying for one:

Convenient application process. Our  100+ Lenders in our Nationwide partner lender network specifically operate with online applications and because of this, has some of the quickest turnaround time frames from applying to funding available.

Quick funding. You can learn your application status in minutes with our platform, and if approved, you can accept the loan contract. Once you do this, you can expect the money in your bank account as early as the next business day.

Flexible eligibility criteria. Getting approved with bad credit is possible, primarily because lending norms are slightly more relaxed. “Getting approved without a credit check” typically means lenders generally don’t make hard inquiries on your credit score, but you’ll need to demonstrate how you’ll be able to repay the loan.

Variable fees. The state you live in along with the amount of money you borrow has an effect on how much you pay in fees. Not all lenders charge the same fees, so keep this in mind when comparing your options.

Loan amount and terms.Both these aspects depend on state laws. In most states you can borrow up to $5,000 and the repayment period can extend up to five years.

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