How to Apply for Online Installment Loans in Texas

by Jim Hughes   August 19, 2019

Finding money online can be tricky in the Lone Star State. Let us help guide you through the process of receiving fast cash in TX.

Here is some important advice for anyone looking to find information on installment loans: Be careful. Not all of the articles out there are fact-based, and some are downright misleading. Some of the information is truthful, but there is also a lot of inaccurate and sometimes false information circulating around the internet. It's important that consumers know what's accurate and what isn't when looking for online installment loans because many scam websites use misleading information as a method to commit identity theft.

What to know when looking for an installment loan in Texas.

Breaking Down Installment Loans

First, consumers need to understand the terminology around installment loans and how they're structured. The definition of "installment" means that a loan will be paid off in portions over time instead of in one lump sum at the loan's maturity date. For this reason, many traditional loans can be classified as installment loans because they are usually meant to be paid off in monthly increments that amortize both the principal and interest. Mortgages, auto loans, and asset-based business loans all work this way. But the specific online installment loans that consumers turn to usually have a maturity date of less than one year, and they often have a more simplified application process.

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1. Installment Loans are Different from Payday Loans

It's not uncommon to see installment loans categorized with and often confused with payday loans in Texas. But they shouldn't be because while both have the same kind of requirements for approval, there are stark differences. Online payday loans work the following way:

  • A lump sum is deposited in a checking account that is due in full on a specified due date.
  • The loan usually must be paid off in full within two weeks.
  • Borrowers are usually limited to borrowing no more than a portion of their weekly or biweekly paycheck.

Installment loans in Texas usually work like this:

  • A lump sum is deposited into a checking account.
  • It's paid off in multiple fixed amounts until the loan has amortized.
  • Borrowers usually have a higher amount they can borrow with installment loans.

Some lenders do require biweekly payments for borrowers who receive biweekly paychecks. Both installment loans and payday installment loans fall under similar regulations.

2. Installment Loans Can Be Unsecured

An unsecured loan is one that the borrower can obtain without needing to offer any personal asset as collateral. Many traditional loans do require some form of collateral, be it a home, vehicle, valuable collectibles, or other assets. Since an installment loan is not directly borrowed against a vehicle like an auto title loan, the loan is riskier for the lender, which can translate to higher interest and fees for the borrower. But there are usually steps taken to make sure the borrower can make scheduled payments such as the following:

  • Checking the borrower's source of biweekly or monthly income and making sure it's greater than the scheduled payments due
  • Looking at the borrower's past debt history
  • Making sure the borrower's bank checking account has been open for at least several months and hasn't had flags put on it

It should be noted, however, that lenders will not always run these kinds of checks. It is chiefly up to the borrower to determine their own loan worthiness. Remember, being approved for a loan does not ensure one’s ability to repay a loan.

Texas Installment Loan Regulations

One way borrowers can make sure they don't get scammed is by knowing Texas laws on installment loans. One of the main things they should be aware of is that most installment loan providers operating in Texas are not the actual company making out the loan. Instead, they're what's known as a Credit Access Business in Texas which is essentially a broker for another lender who offers the service to consumers. That's because Texas has some laws that do cap what regular consumer lenders can charge for loans that have more than 10 percent APR, or finance charges for loans exceeding $100. But when a lender registers as a CAB, they can get around some of these finance charge restrictions and thereby raise their APRs. But there are other guidelines that CABs providing online installment loans in Texas must follow as set forth by the Office of Credit Commissioner:

  1. Installment loans cannot exceed 180 days in length.
  2. All lenders must hold a state license from the OCC, and if their local jurisdiction requires, they must hold a license from their city's department of finance.
  3. Lenders must have their OCC license shown in plain sight in their physical store (if applicable) or on their website.
  4. Lenders must have a very clear policy on all charges, including the loan's APR, and they must state how the loan will be repaid. They are not permitted to charge any fees for early repayment.
  5. Lenders also need a warning on the application that says the loan could have a high APR, and borrowers are advised to seek other options first

More information can be found on the OCC website, and consumers can also file a complaint with them if they believe a lender did not properly disclose certain charges or misled them in any way. If a consumer believes they've found an unlicensed or scam lender, they can also contact the state's Attorney General office.

How to Find Texas Installment Loans with No Credit Check

One myth that has been advertised at times on the internet is that installment loans with no credit check exist, but they do not. High-risk loans like these that aren't secured often prompt the lender to check the borrower to see if they can make installment payments. A credit check will always be necessary. But what the lender usually will do is consider more than just a borrower's credit score, and in some cases, they may offer installment loans with bad credit if the borrower has enough income or supplemental income to make their payments. In general, poor credit doesn't automatically disqualify anyone from getting an installment loan, but those facing or about to file for bankruptcy are likely not to qualify. Usually, lenders are willing to work with a variety of credit scores.

Where to Find Online Installment Loan Direct Lenders in Texas

Some brick and mortar installment loan providers are also direct lenders with application options on their website. You can search for online installment loan direct lenders through a local search, or you can check with the OCC on the validity of a lender's license. Keep in mind that some lenders have a national presence and some loan amounts advertised on their websites may not be the final amount you can borrow.

Jim Hughes   OpenCashAdvance Marketing Manager
Personal Finance
Jim Hughes remembers checking his first email on the original BlackBerry 850 nearly 20 years ago. It was spam, and he fell for it. Even so, he’s been on the beat every day since, following the ebbs and flows of financial technology. Look to Jim for insider exclusives on shorter-duration loans, installment loans, and other popular products in fintech today.
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