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Finance

Quick Guide to Online Installment Loans for Beginners

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In this quick guide to online installment loans, we’ll teach you how to navigate on your loan application and know how it works. Typically, this guide is for beginners or first-time borrowers.

Installment loans are much like a payday loan that can solve your financial hurdles quickly. There is a big difference when applying online because the application is very fast. However, repayment takes longer for installment loans.

Installment Loans

Installment loans are paid plus the interest and fees on regular payments. Some lenders may ask borrowers to repay once a month. Sometimes, they may allow bi-weekly or weekly payments.

This type of loan is a short-term loan that is bigger in amount and takes longer to repay than personal loans. The interest is higher also higher.

People with bad credit scores are more likely to be its market since it is less regulated than payday loans. You should be wary when taking this type of loan and ensure that you understand the terms and interest rates.

Can I apply for an installment loan?

If you are needing accessible cash right now but you have a bad credit score, this one is for you. Lenders for this type of loan aren’t stringent with your credit history.

Even you come from a low-income bracket, it wouldn’t be a basis for you to be declined in your application as long as you can repay timely. In short, there is no hard credit check. If you can show your income and bank details, you are more likely to get approved.

How much do I have to repay?

The amount that you pay for this type of loan would depend on the lenders and how much you owe them. You can expect these included in your repayment:

  • Annual percentage rate (APR): It covers the interest and fees on a yearly percentage.
  • Interest: Expressed in percentage, it is the rate of interest that you have to pay when borrowing.
  • Fees: You can expect to repay the loan plus origination fee, late penalties, and prepayment penalties.

What are the requirements for getting one?

  • Government-issued ID. Lenders ask for proof of identification to make sure that your age is eligible. You must be at least 18 years of age.
  • Proof of income. As long as you are receiving a paycheck for a part-time or full-time job, welfare or proceeds, you are eligible.
  • Bank account. This is proof that you are receiving your income and for them to take out the payment.
  • Proof of address. You should be a resident of the country that you are applying for.

How do installment loans work?

When repaying installment loans, you need to know that it varies per lender and the type of loan. Nevertheless, here are common features of installment loans:

  • You can repay your loan from six months up to 60 months (5 years).
  • Repayment is done through your bank account. Lenders may automatically deduct it from your account.

You can apply for installment loans depending on your purpose. For example, you can apply for a car loan or a student loan. However, if you are getting a personal loan, you can use it in whatever way you want to use it.

Usually, installment loans are used for unforeseen expenses like home repairs, funerals, travels, medical bills, and a lot more.

  • To improve your credit score. Repaying your loans on time can help you in improving your credit score. You can apply for a credit building loan in a credit union or a bank that has low interest and few requirements.
  • To pay medical expenses. During emergencies and unexpected medical expenses, you may apply for this type of personal loan to help you cover the medical bills.
  • Car repairs. Car repair is not cheap. When your car broke down, you need a quick fix that can support your expenses.
  • Overdue bills. You can run a home without water and electricity. An installment loan can help you pay your overdue bills to avoid more problems.

Getting installment loans online can benefit you a lot when you are in the middle of a financial crisis. Since it is done online, you can access a quick solution to your problem and avoid bigger ones.

You are able to know if you are approved or not within the same day of your application. This way, you can have peace of mind that part of your problem can be solved.

Always be careful with predatory lenders. Watch out for red flags like guaranteed approval, lenders that offer loan renewal options like a rollover, or those that ask for upfront fees because you may suffer more financial woes.

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Sean Jacobson

I'm Sean, a former HR and business consultant providing you insights into the business world for Leader to Leader.

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