Options of Getting Installment Loans for People with Poor Credit
Getting a loan with bad credit is never a guarantee. Fortunately, there are loans out there for many of those who have made a few financial missteps in the past. Installment loans for bad credit can be a way to borrow money and pay it back on a set schedule, especially if you have a regular income. These loans are very similar to other loans that you may have taken out in the past. If you have poor credit, they may be a viable option if you find yourself in need of cash quickly.
What are Installment Loans for Bad Credit?
An installment loan is one of the most common types of loans. Unlike a revolving line of credit, this type of loan is for a fixed amount and is paid off in a certain amount of time. Installment loans tend to set out not only the starting and end date for the loan, but also exactly how much the borrower will pay each month, and the total amount of the borrower will pay over the lifetime of the loan. If you have ever taken out a mortgage or gotten an auto loan, you might already have experience with installment loans.
Installment loans for people with bad credit are a subset of installment loans sometimes offered to people with credit scores under 600. While these loans operate in a manner like other installment loans, lenders tend to take factors other than credit score into account when making lending decisions. While there are no installment loans that can be taken out without a credit check, there are easy approval installment loans for bad credit.
The Application Process
The application process for getting this type of loan does differ from lender to lender. In most cases, though, a few things are very important. Because one’s credit score isn’t the only deciding factor in getting a loan, these applications tend to rely more on recent payment histories and proof of income. Getting a bad credit installment loan almost always requires that you have a provable, regular form of income that won’t be interrupted soon. The more stable your employment and payment history, the easier the application process will be. When you are taking installment loans from the direct lender the factors are different but at the same time similar as well.
Once you have your paycheck stubs in, the lender may look at a variety of other factors. Most important tend to be the other debts that you already hold and your spending habits each month. If the lender feels like you can take out a monthly installment loan, you may receive an offer. This offer will include the interest rate, how much your payments will be each month, and a pay-off date. If you agree to the terms, you will generally be issued the loan quickly. Your first payment will probably be about thirty days after you accept the loan.
The Benefits of Poor Credit Installment Loans
There are several good reasons to check out this type of loan. The most popular, of course, is the fact that these loans both tend to have lower interest rates than typical payday loans and that they are available for those who don’t have perfect credit. As such, this tends to be one of the borrowing options used by those who have bad credit. If you find yourself in a situation where having quick access to cash is a necessity, these loans may realistically be one of the few places to which you can turn.
In fact, the quick nature of these loans makes them a solution for dealing with an emergency situation. If you have an emergency and you know that you can pay back the loan in time, this can be one solution to consider.
It is not advisable to take out an installment loan if you don’t have an emergency pending. You might choose to take out a loan to build up your savings. This is an unnecessarily expensive way to accomplish this goal. Those who are trying to get on their feet financially often need a little bit of extra breathing room, but that’s best achieved through a maintainable budget and not through debt. Even if you know you can make the payments with ease, saving is better than borrowing if you do not need the money right away.
Finally, these loans can be good for building your credit back up. If your lender reports to a credit bureau, then the bureau will see that you have been approved for a loan. A history of on-time payments may improve your score. You may even get the benefit of shifting the on-time versus missed payment percentage back in your favor, something that has a huge impact on your overall credit score. If you’re looking to gain points over a relatively short period of time, an installment loan might be the right choice for you.
Choosing the Right Lender and Loan
Getting your installment loan will always involve working with a lender. When you get your loan online, the best news is that you’ll have a wealth of options from which to choose. The bad news, though, is that choosing between so many lenders can be overwhelming. It’s important that you take a few moments to think about what type of loan you really need and what you’re looking for from a lender. Be honest with yourself so that you can get a loan that will help you to accomplish your goals.
The smartest thing you can do is to look at your own finances and to figure out what you can realistically pay. While some lenders might offer you more based on their calculations, try to stick with a loan that gels with your calculations. Likewise, it’s a good idea to know exactly how much money you really need so that you are not tempted to borrow too much.
Getting a small installment loan can be a way to help with an emergency and allow you to deal with situations that your bad credit might otherwise make impossible. Make sure that you understand exactly how your loan will work before you borrow any money and never borrow more than you can realistically afford. If you make financially sound decisions, you may be able to use these loans to improve your life, and you might even be able to pull your credit up. You will need to make your payments on time, so make sure you can commit to the payment schedule.