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Ten Things You Should Know About Installment Loans
When in a bind financially, most people are desperate for money. For this reason, they approach lending companies without proper scrutiny whether it is for their own good or they may end up losing more sinking further into debt and even hurt their credit score.
With the current economic situation, there are various forms of lending which are out there to make the profit. Therefore borrowers should be careful not to get duped such that they end up regretting the choice they made without considering other better options.
Borrowers should have great understanding and knowledge of the type of loan they want to take. For this reason, there are certain things you need to know about Installment loans before deciding whether beforehand whether they meet your financial needs or not.
What is an installment loan?
Before you consider applying for any loan you should at least have a basic knowledge of what you’re getting yourself into.
By understanding what loan you are about to take helps you know whether it can meet your financial needs or not.
An installment loan generally refers to any type of loan whether for personal or commercial purposes that are borrowed and is supposed to be repaid in scheduled payments or installments.
Installment loans relieve off the borrower the burden of having to pay the whole lump sum at a go like other forms of borrowing like payday loans which take a huge chunk out of your paycheck.
Installment loans are secured and unsecured
There are many forms of installment loans that include, auto loans, mortgages and personal loans. These loans are both of a secured and unsecured nature. Mortgage and Auto loans are usually secured types of loan.
In both cases, you give up property as collateral which is a house in the case of mortgage loans and a vehicle for auto loans so that in the event you are not able to make the payments, the lender has legal obligation of taking up your property and selling it to pay him/herself.
Personal loans, on the other hand are unsecured. That means to apply for a personal loan the creditor does not need you to put up any property as collateral instead the creditor checks your creditworthiness which is determined by your credit score, and proof of income which guarantees that you are will be able to make payment.
Installment loans are more flexible hence allowing borrowers to distribute payments throughout the loan term.
Requirements for application
Before applying for an installment loan you should really first try its eligibility test to determine whether you qualify for the loan.
However, the eligibility test of an installment is quite easy both online and in-store. You will have to meet a few set requirements in order to secure this loan, these requirements include:
Minimum age, where you must have attained the legal age of 18 years or older in order to apply for the loan, secondly you must reside in the state you choose for your loan option such that you cannot approach a lender in Ohio whereas you reside in Colorado the application process will not go through.
If you are applying for online installment loans you must provide your social security number and a savings or check account since upon approval your funds are transferred directly into your account. Upon meeting these standards then you are eligible for an Installment loan.
You do not have to be employed
Most people shy away from loans as some of them require you to provide a letter from the employer as proof of employment. This leaves out people who are in need of financial assistance but are not employed.
Installment loans relieve you of such pressure. With this loan, you do not need to be employed so long you have a steady source of recurring income. This guarantees the lender that you are in a position of making scheduled payments or installment for the agreed period of time.
It is always important to consider the cost that you are likely to incur while applying for a particular loan before you even start the application process.
When applying for online installment loans in addition to interest charges borrowers have to pay other fees such as application fees and processing fees.
Installment loans have fixed interest rates
Many times borrowers suffer waking up to hiked interest rates as the loan progresses. Some traditional forms of borrowing have varying interest rates such that they end up increasing the repayment cost of the loan in the long run.
This makes it even more expensive for the borrower such that he/she may delay in making payments which could adversely have a negative effect on the credit score. By providing fixed rates Installment loans give borrowers a golden chance to budget their finances over the repayment period hence keeping them more at ease.
Installment loans improve your credit score
All borrowers strive to maintain a clean credit score. A good credit score opens avenues for borrowing and somehow acts as a guarantee that the borrower cannot default in making payment.
There are forms of traditional borrowing which hurt your credit score if you are late in making payments or if you default altogether.
Installment loans, unlike these other forms, improve your credit score with time. With every payment or installment, you make your credit score improves. Borrowers with bad credit, therefore, can redeem their creditworthiness.
Installment loans no credit check
For those who are haunted by a low credit score or no credit such that their borrowing is somewhat difficult, installment loans offer a ray of hope to them. Borrowers on this bumpy road of bad credit can apply for bad credit installment loans from installment loan direct lenders who do not check your credit score but lend you funds directly to your bank account. Installment loans no credit check is the best option and what you should look out for.
They are fast
Installment loans are tailored for emergent situations such as medical bills, death in the family, unexpected car finances and many others that only seem to pop up catching you unawares.
For this reason, installment loans offer funds to the borrower’s account on the same day or on the next business day. Application of an installment loan also does not require a lot of documentation hence making the loan processing procedure faster.
Installment Loan Companies
This is a very important aspect to consider before applying for an installment loan. Borrowers should carry out research to ensure that they are dealing with a licensed company.
The emergence of rogue loan lenders is on the rise nowadays which calls for borrowers to be more vigilant and on the lookout for extortion. The borrower should ensure that the lending company is licensed by the state before entering into agreement.