If you need quick funds to cover sudden expenses such as overdue utility bills, emergency home improvement, a vital medication, mechanical car repair, unexpected travel expense or to pay for any other urgent expenses, you can consider applying for an online installment loan before you check with your local lenders. You can easily obtain an online installment loan from the comfort of your home with just a few clicks on your keyboard.
To help you better understand how online installment loans work, let’s look at a few frequently asked questions, pros and cons, eligibility criteria, loan application process and a few things you should consider before you apply for an online installment loan.
What Is An Installment Loan?
Installment loans can be defined as any form a debt that should be repaid over a given period. The repayments are equally divided into portions known as installments or schedules and spread over a specific period. The loan term can be as short as several months or as long as around 30 years. An excellent example of a type of such a loan is a mortgage.
Installment Loans and Bad Credit
Installment loans create an ideal solution if you have bad credit. Bad credit installment loans favor people who are in of need immediate cash solution but is not able to repay the credit in once-off repayment. Interest rates for these loans are fixed and are repaid twice a month or on a monthly basis where each payment consists of a small portion of the principal loan amount and a portion interest rate.
Difference Between Installment Loans and Payday Loans
Many people may confuse installment loans for payday advances. Similarities between the two may be there, but significant differences are also there, and the borrowers should be keen about such distinctions. Proper knowledge of the critical differences can significantly help you identify the right kind of loan that tackles your given needs.
Here are the main contrasts between payday and installment loans:
- The maximum limit of money to borrow: A borrower may around $1,000.00 in payday loans whereas, in an installment loan, the amount can go up to $5,000.00
- Repayment loan period: The Payday borrowers will repay their full loans amounts in a single repayment during their payday, while the installment loan borrower will repay for a period their loan in small repayment schedules over a period.
- The interest rate: A one-off fixed amount is remitted on the final day for a payday loan whereas, for the installment loan, variation in interest rates is visible since they calculate for the entire period required to repay the loan.
Payday loans, unlike installment loans, are not designed to be prolonged with an additional fee if the loan cannot be repaid all at once. An installment loan offers the borrower with a fixed set of affordable payments which make it easier to afford to repay the loan without getting trapped in an endless cycle of debt by only extending payments.
What Is The Term Repayment Of An Online Installment Loans?
The repayment period of the installment loan is pre-determined even before the borrower gets the loan in the account. Often, lenders have flexible terms and conditions which usually vary from a few months to a few years thus making it possible to acquire long-term installment loans.
How Are The Interest Rates Of An Online Installment Loan?
The interest rates gradually increase on a daily basis. The variation is dependant on the period and the amount the borrower requires. Those borrowers, who repay their loans earlier than the due date, enjoy the privilege of not paying the whole interest amount as many lenders offer such benefits.
What Is The Impact On Your Credit If You Borrow An Installment Loan?
It can help you improve your credit score if you borrow responsibly and able to pay back on time. Otherwise, it can also hurt your credit even further.
What Are The Pros?
- Very convenient and fast
Online installment credits are extremely convenient since you can search for prospective lenders, check their terms of loans and interest rates, and then apply for the desired loan in an instant whenever you like and wherever you want. The online application forms are easy to complete and only take a few minutes provided you have a device that can access the internet. The approval process is speedy and once complete you will get your money almost instantly. Applying for your loan online is quick, comfortable, secure, and easy to follow. When you desperately need funds, an installment loan can be a good quick fix.
- Less paperworkƒle
You can complete the application online, and you don’t have to compile forms for your application. During a physical installment loan application, you may be asked for physical statements or referees thus making an online application more eco-friendly.
- They are cheaper than loans from a local lender
Online installment loans incur little expenses given that they don’t need to own or rent physical operating offices and thus can offer loans at lower fees and interest rates. Besides that, many online lenders will offer fixed rates, so it gives you peace of mind and thus no worry about the fluctuation of the rates over the loan term.
- May improve your credit rating
Online installment loan may greatly assist you to change the status of your poor credit score. FICO credit score examines your eligibility using specific criteria such as repayment of loans on a timely basis and also the type of loans. Different debt accounts can raise your credit rating since it depicts your ability to know which loan best fits your different needs. With online lenders, any credit score is eligible, so people have a greater chance of being approved. A borrower has a high probability of loan approval even with bad credit.
- Well spread repayments
An online installment loan can be repaid in several payments, and so someone can acquire the cash they require even if they cannot repay the loan all at once according to their income level. They offer up to 24 to 36 months for repaying the loan.
- Flexible terms of payments
An installment loan provides the options of either making early loan repayments thus may save you some money on interest or make partial repayments over the loan term. Therefore, you can avoid lengthy commitment and manage to be debt free as early as you desire. Since the repayment plan is not fluctuating, you can plan for the repayments easily without fail or default.
- Can borrow more substantial amounts of even $5,000
You can acquire more significant amounts of cash that are up to around $5,000, unlike payday loans that can only lend you up to $1000.
What Are The Cons?
- Online Installment loans have an APR which is much higher than you would typically obtain from a local lender like any commercial bank since they usually assume a higher risk through lending money to borrowers without asking for any security. However, the said high APR is not an indication that payments are expensive. So, if you try and repay your loan early, you will save a lot on interest costs.
- Another disadvantage is that you get indebtedness for an extended period.
- It makes a direct debit on the borrower’s account.
- Some lenders can perform a traditional credit check.
- It can cause damage to your credit score if not repaid promptly.
What Are The Basic Requirements?
Despite your preferred way of applying for a loan, here are some conditions that you must meet for you to be eligible and get an approval.
- You have a valid Social Security number
- You must be 18 years of age or above
- Your account should be able to receive money electronically
- Be currently employed and can prove it.
The application process usually is very brief. Here are the main steps of obtaining online installment loans:
- Online form completion.
- Wait for an instant response for approval or decline.
- Modify the loan offer in a way that will enable you to repay promptly.
- Re-read the loan contract carefully to ensure everything is okay.
- Electronically sign the loan agreement.
- Get the money in your money in less than a day duration.
What Are The Things You Should Consider?
Although installment loans help you deal with unexpected financial difficulties. In some instances, it may drop your credit score if not checked. Things you should consider when requesting for a loan can include:
- Establish the economic emergency that you strictly need to meet.
- Avoid going beyond the urgent financial need.
- Study the different credit offers carefully
- Choose the most favorable loan offer.
- Identify how you are to repay your loan.
- Use the money only for the purpose it was meant.
Don’t worry about where you’ll get money if you find yourself in an urgent need of finances since you can acquire an easy installment loan by applying online without much hassle. So, if you need an instant cash advance to fund an urgent need or to pay off critical debt, apply online for an installment loan. If your application is approved, the funds will be sent to your bank account immediately upon approval.