Installment loans allow you to borrow a specific amount of money and return it over a set period of time. Installment loans involve mortgages, auto loans, and personal loans.
It is not a secret that borrowers with good credit may find it easier to apply for a loan and receive a lower interest rate. However, if your credit score is low, you are still eligible for installment loans, but you may be forced to take out an installment loan with a higher interest rate and higher fees. Thus, it is highly recommended to shop around for installment loans with reasonable terms and rates. When applying for any type of loan, it's critical to be aware of your credit score and understand the terms you consent to.
About Installment Loans for Bad Credit
Installment loans for bad credit are loans tailored to customers with poor credit scores, a poor credit history, or no credit history at all. These loans are available from online lenders, local banks, and credit unions.
Installment loans can be secured, meaning borrowers must put up collateral to acquire a loan, or unsecured, which means that borrowers do not have to put up collateral. However, for borrowers with bad credit, higher interest rates are a regular feature of both secured and unsecured installment loans.
The loans vary in size from a few hundred to several thousand dollars. Personal loans and car loans can be paid off in monthly installments over a period of 12 to 96 months. Home installment loans must be repaid in monthly payments over a 15-to-30-year period.
Interest rates and terms differ from lender to lender. Interest rates can be either fixed or variable for installment loans. Fixed rates refer to interest rates that are guaranteed to remain constant during the term of the loan. While variable interest rates are linked to a financial index, hence your rate and payments may change over time.
Remember that an administration fee may be charged for bad credit installment loans, while borrowers with good credit scores never pay an administrative fee.
What to Provide for Installment Loans for Bad Credit
Generally, online lenders do not require much info to provide a loan. Online applications suggested by many platforms offering loan services require your full name, age, evidence of your residence, Social Security number, and information about your income.
A Piece of Advice
Without a hard pull, lenders are able to let you find out if you're likely to qualify and see your estimated rates by only performing a soft credit check. Thus, when looking for an installment loan, look for lenders who provide this information with a soft credit inquiry, as a hard pull or too many queries can harm your credit ratings.
In Conclusion
Thanks to online lenders, consumers with poor credit scores now have a variety of installment loan possibilities. However, before you apply for an installment loan for bad credit, make sure you look into all of your options to see which one will work best for you.