Installment Loans with Monthly Payments
Sometimes major financial situations happen when you least expect them. You might have to deal with an emergency medical bill, a car repair, or even a sudden move. If you don’t have thousands of dollars immediately available, it can seem like it’s impossible to deal with this type of crisis. Fortunately, monthly installment loans can help you to spread the cost over several months, ensuring that you can take care of your financial problems while still sticking to your budget. Understanding how these loans work and why they might be beneficial is a great way to determine whether you are ready for an installment loan.
The Basics of Monthly Installment Loans
These loans are among the most common types of loans that you’ll see on the market. While you may not have seen the exact term used, you’ve probably taken out one in the past. Installment loans are simply a type of lump-sum loan that is paid off over an agreed-upon period of time. If you have a mortgage or a car payment, you are already using a version of one of these loans. In fact, most loans that you take out during your life are probably going to fall into this category.
Two things are really important when it comes to this type of loan. The first is that you will have the same payments at the same time each month. You will set up this date when you first take out the loan, and it won’t change without at least some negotiation. When you’re done paying off the loan, you do not automatically have access to that amount of money again, as you would with a credit line. Instead, you will have satisfied an agreement with the loan originator.
Monthly Installment Loans for Bad Credit
It’s important to remember that one of the most attractive parts of installment loans is that they don’t require a perfect credit score. In fact, there are many lenders who specialize in working with borrowers who have average or even poor credit. This doesn’t mean that there are no standards. Those with a bad credit history still need to have a regular income. Those with a bad credit score may receive higher interest rates.
If you see an ad for monthly installment loans no credit check direct lenders, be wary. There are no installment loans issued by reputable companies that can be taken out without at least a cursory credit check. The credit check might not matter for approval, but it will always matter for the interest rate and for verifying your identity. If a company claims not to check your credit, you’re either dealing with an originator who is going to charge extremely high-interest rates or who is hiding the fact that the business does actually run a credit check.
Why 12-Month Installment Loans Make Sense
Taking out a loan over the course of a year can be one of the best ways to deal with the financial impact of your new-found debt. At a very basic level, this sort of loan allows a borrower to really space out payments. You could be looking at one payment a month, which does tend to reduce the amount of stress on one’s bank account. It may allow the borrower a unique opportunity to set a date for monthly payments, so each payment will come due at the ideal time each month.
Taking out a loan over twelve months also gives you more chances to get ahead on your payments. You may be able to use gifts or your tax refund to pay off larger chunks, reducing the overall amount that you pay and possibly even paying off the loan early. When you split the payments over twelve months, you give yourself more opportunities to get back on your feet financially and to deal with the debt in a more practical manner.
Using payday installment loans is becoming a more common solution than you might imagine. As banks and other traditional lending sources stick to their strict risk assessment models, alternative lenders are becoming more popular with the average borrower who does not have the wealth or credit history necessary to borrow from the big guys.
That said, it is important to pay off a high-interest loan as quickly as possible. If your loan does not have a prepayment penalty and you can afford to pay it off faster, then you can save yourself a lot of money by paying off the loan early.
The Loan Application Process
Once you’ve made the decision to get a loan, the next step will be the application process. Fortunately, things are relatively straightforward. Whether you choose to borrow in-person or online, you’ll deal with roughly the same forms, and you’ll need to provide roughly the same type of information. If you go in prepared, you’ll stand a better chance of getting through the process in one sitting.
Make sure that you have access to your latest pay-stubs before applying. Most installment loans look at your take-home pay as the most important factor in determining how much you can borrow, so keep any income documents handy. It’s also not a bad idea to look at your credit score. While installment loans with poor credit may be possible, knowing your score can help you anticipate the interest rate.
Applying for the loan itself will be a quick process. Many loan originators will be able to let you know if you qualify in a matter of hours, if not faster. Actually getting your money can often take as little as one business day. The good news is that you’ll get all of your answers quickly. The bad news, though, is that if you are presented with a loan offer, it likely can’t be negotiated.
What You Need to Know Before Borrowing
There are a few key things that you’ll need to know before you borrow. The most important is that an installment loan is something that must be paid back. You’ll know the exact time-frame in which that must be done. If you cannot afford to make the payments, you shouldn’t borrow.
Do not rely on the lender to ensure that your income is high enough to make your loan payments, as some lenders may lend to you even if you cannot afford the loan.
It’s also important to remember that the loan originator has a vested interest in recouping its money. Far from being something to worry about, this means that the originator will usually be on your side. If you know that you will have trouble making payments, you’re better off calling the originator to work something out. There may be penalties, but the company will often help you to find a way to make your payments without going into default.
When you choose to borrow, you’ll be freeing up the cash you need to pay your bills while still being able to get other things done. You’ll also be able to improve your credit score and ultimately gain access to better lines of credit once you pay off your loan. Simply put, this type of loan is something that’s worth taking out as long as you’re willing to be responsible with your borrowing choices.
Choosing to take out an installment loan that has monthly payments can be a way to deal with a major financial obligation. While these loans are common, it’s still a good idea to educate yourself on how they work and how such a loan might impact your finances. Always make sure to work with a lender that you can trust.