Some people are interested in taking installment loans but are held back by the fact that their credit scores are not exactly perfect. Perhaps you had been through a rough patch and had to take a payday loan and now think there’s no possibility of getting approved for other loans.
The truth is there are loans that people with bad credit can still take. Here are some things you need to know about installment loans when you don’t have spotless credit:
What Are Installment Loans Exactly?
You may have heard of loans that classify as installment loans and not know it. Installment loans are a type of loan that gives the borrower a lump sum and terms regarding its repayment. As the name implies, you can repay the amount that you borrowed plus the interest and other fees in installments over the agreed-upon period. Many find this a better option because they don’t have to pay the loan amount in one lump sum.
How Do You Apply for Installment Loans When You Have Bad Credit?
The lender that you have chosen will check your credit, debt, and income to see if you are eligible for an installment loan. There may also be a pre-qualification option before application that allows you to see beforehand the loan amount you can get and the interest rate for that amount.
There are no-credit-check loans offered by some lenders but you should be wary of those because they often come at extremely high rates.
Some of the requirements that you need to meet include these:
You must be 18 years old or older
You must be a permanent resident
You must have a monthly income that’s verifiable
Your bank account should be in good standing
You must have a working email and phone number
Upon completing the requirements, your application should be processed and your funds could be deposited in a day or two.
How Can Installment Loans Affect Your Credit?
Loans can either improve or hurt your credit, depending on how you handle the repayment. You can actually use it to improve your credit score by making on-time payments every month to prove that you are financially responsible. If you miss a payment, though, know that it could badly hurt your credit.
If you are the type of person who is too busy that you sometimes forget about your bills and their due dates, you would benefit from setting up autopay for your loan repayments. This way you won’t have to worry about missed payments. There are even some lenders who offer discounts to borrowers who use autopay.
What Are Your Other Options?
If you are worried that you won’t get approved and you badly need the money, you might want to consider other options. These are not payday or title loans which could actually put you in deeper trouble with their high interest and inflexible repayment methods.
You can try asking your employer for a paycheck advance. You could also consider getting a pawnshop loan instead or find a side hustle to earn more cash. Of course, there are also your friends or family who might be willing to help you out.
It is not impossible for those with bad credit to take an installment loan. There are online lenders and credit unions that offer installment loans even if you don’t have spotless credit. However, do remember that even if strapped for cash, you still need to make wise decisions in any situation. Be smart about choosing the lender and be wary of high interest rates and additional charges that you might not know about.
First Finance Company understands situations when borrowers need funds that they can get in the shortest time possible. That’s why we offer same-day installment loans that you can also use to build or rebuild your credit. Contact us today to know more!