Do you know what an installment loan is? Do you know why they are different from payday loans or bank loans? Do you know how many payments to expect with an installment loan and what the average interest rate will be? Or what type of credit score it takes to get approval for an online loan. Don’t stress if you don’t know the answers to all those questions! These are common questions that we’re asked by people that visit this site. Let’s get right into it and answer these questions so you can get back on track to finding a top installment lender.
The types of installment loans listed on the sites above have been around for years. With an installment loan, the consumer is agreeing to pay back a set amount of money over a period of payments. These payments can last for months or even years. This type of financing structure is different from a payday loan or cash advance. Reason being, a payday loan is generally paid back in weeks or even days. Most payday or cash advances will be paid back in 1 or 2 payments. At this point the total amount should be paid back in full. With a typical installment loan, a borrower can expect 6 payments, 12 payments and sometimes even up to 60 payments. It all depends on the lending terms between the lender and borrower.
You may ask yourself, why would anyone enter into an agreement where loan payments take place over a period of months instead of a few weeks with a payday loan? The difference is that installment loans are issued for higher amounts than traditional short-term lenders. Most direct lenders will start at $500 and go all the way up to $50,000+. It depends on what an individual company is willing to lend. Some states have laws in place that limit the set minimums and maximums when it comes to the amount you can borrow. In California, for example, a direct installment lender will often set a minimum loan amount of around $2,500. Most states have specific limits like this to protect consumers from aggressive personal loan companies. Be sure and check with your state before you enter into an agreement with a direct lender.
Another factor that differentiates direct installment loans from payday loans is applicant’s credit score. We all know that most everyone will qualify for a payday advance regardless of their credit score. With this type of short term loan, an applicant will get a high interest rate in exchange for the opportunity to borrow money. Most people that apply for these types of loans have poor credit and don’t have many other lending options to choose from. Most banks will be reluctant to extend credit to someone that has poor credit. Additionally most short term lenders won’t even check an applicant’s credit score. If you have verifiable employment, direct deposit and no past bankruptcies there should be no problem getting a loan. With an online installment loan, the qualification will be longer as the lender is providing a larger amount. With most companies that offer unsecured loans, you will need to show employment history and the ability to pay back the total amount. On top of the that, the installment lender may want to run credit to see if there are any other personal loans or serious credit delinquencies. Installment lenders don’t need excellent credit but that doesn’t mean they wont look at someone’s financial or bank history. Most companies that offer online installment loans have internal qualification standards. These are in place to determine if an applicant is credit worthy. It all depends on the process of each individual lender.
We try our best to give as much information as possible about each lender that funds direct lender installment loans. We try to source as much information as possible from the individual lender websites. We also include specific information that we know about some installment lenders. Some bits of information that we list that may be helpful include the following. How long has that short term financial lender been in business? What to expect with the application process and the monthly payment/interest rate. Does the company provide bad credit loans and work with individuals who need to improve their credit? If so, what type of interest rate can you expect with poor credit? These are helpful bits of information and should be used when picking a company. The most important thing you need to know is if a specific online lender is able to fund loans in your state. This may not seem important, but believe us there is no way to get a loan from an unlicensed lender in your state. The last thing you want to do is apply online, only find out they don’t fund bank or installment loans. As always make sure that this type of short term borrowing is something that’s needed. Don’t borrow money to pay for something you want. Short term loans and cash advances should only be a last resort. It’s critical that all borrowers pay back their loan within the allotted time to avoid fees and extra interest charges.