What are the benefits of Installment loans for bad credit?
Do you have a poor credit rating and in need of cash? Requesting for a loan from financial institutions can be quite challenging for borrowers with bad credit. However, there are a number of alternatives for borrowers who don’t have excellent credit history to access a loan in banks and other lending institutions. Among these options are installment loans for bad credit. With installment loans, lenders focus more on the borrower’s ability to repay the debt rather than considering their credit history. Borrowers are required to repay the debt over a period of time (most lenders require the loan to be paid within six months). This can be a perfect alternative for borrowers who may not be able to repay the loan on their next payday but are in urgent need of cash.
One of the top considerations for your loan to be approved by banks is having a good credit. But for one reason or another, not everyone has the best credit history. The good thing is that there are lenders who are willing to provide a loan even without considering your credit history. If you have a valid bank account and a steady income source, most lenders will consider you a less risky and can easily have your loan approved. Before applying for an installment loan, it is important to ensure that you meet all the requirements listed by the lender. As much as there will be no guarantee of your loan being approved, you will stand a better chance if you ensure that all the requirements are met before requesting for an installment loan.
How does an installment loan work?
Most installment loans for bad credit work the same way as other loan types. First of all, the borrower is required to submit his or her application. The application process is simple and your loan can be approved within 1-2 business days if you apply online. But borrowers who apply for the loan in person can access the finds as soon as 24 hours. Rather than repaying the loan in lump sum, borrowers can make monthly payments for an agreed upon period until they clear the loan. The money to pay back depends on the amount borrowed, the loan contract and the state law on instalment loans. Failure to repay the loan on time will attract extra charges. So even before signing an installment loan contract, it is important to first ensure that you are able to repay the loan on time.
Types of installment loans you can apply for
Different lenders also have their own criteria for issuing the loan, which means that you need to compare a number of lenders for you to find the best installment loan to meet your financial needs. Some of the installment loans you can apply for include;
- Payday loans
- Auto loans
- Student loans
- Credit card
Features of installment loans
If you decide that an installment loan is the best option for you, here are some of the features of installment loans you need to know
- Payday loans
The maximum amount a borrower is eligible to depend on the state regulations. Loan amounts also vary depending on the borrower’s needs. However, the maximum amount a borrower can apply for in installment loans is relatively higher compared to short-term loans.
- Varied loan terms
Most installment loan lenders will require you to pay the debt within 6-24 months. But it is also important to note that the higher the loan terms the more amount you will incur on interest.
- Different processing time
There are installment loan lenders who can have your loan approved faster compared to other lenders. If you need the cash to cater for emergency situations, it is important that you find a lender who has a faster loan approval rate.
- Varied interest rates
Installment loan lenders offer varied interest rates and fees. To get a cheaper loan, you need to find a lender with the lowest rates compared to others.
Advantages of installment loans
- You can choose from multiple lenders
There is a wide range of installment loans for bad credit available online. All you need to do is compare their rates and find a lender with affordable rates and convenient terms and conditions.
- Flexible repayment plan
With installment loan, borrowers do not have to worry about repaying the loan in lump sum on their next payday. You can even start repaying the loan after 6 months depending on your agreement with the lender.
- Borrowers with bad credit are eligible to apply
With installment loans, having good credit history is not a major consideration for the loan to be approved. As long as the borrower can prove the ability to repay the loan by having a consistent income source, lenders can easily have the loan approved.
- Faster approval rate
For borrowers who apply for an installment loan in-store, the money can be approved within 24 hours. Some lenders can even approve the loan within a few minutes. With online installment loans, the money will be transferred to our bank account as soon as 48 hours.
Drawbacks of installment loans
As much as installment loans for bad credit come in handy, there are several factors that the borrowers need to consider before determining if the loan is the best option for them. Compared to other loans, installment loans tend to attract relatively higher interest rates. Since you will be required to repay the loan over a long period of time, you also need to have more long-term budgeting. There are also several lenders who offer installment loans and some of them may want to take advantage of your financial situation so you need to keenly evaluate every lender for you to find a reputable one.
Things to watch out for in installment loans
Installment loans can be the last resort for borrowers with bad credit, provided they are able to repay the loan on time. If you feel that your monthly budget is not enough for you to make timely payments, then you should reconsider your decision. Failure to repay the loan on time will not only incur a higher interest, but you can also risk not accessing any loans in future. Besides, your credit score will be negatively affected. Before signing the contract, it is also advisable that you go through the terms and conditions of the loan to have a clear picture of your repayment plan and the total amount to pay back.
Having a poor credit check does not mean that you have zero chances of your loan being approved in future. With installment loans, borrowers with bad credit have the option of repaying the loan over time. The loans also have a faster approval rate, making them the best alternative for borrowers who need urgent funding. So the next time you find yourself in a tough financial position due to poor credit rating, consider requesting for an installment loan.