An installment loan is a type of loan where an applicant agrees to pay a set amount every month during the loan term period. The loan repayment period can range from a few weeks to as long as 30 years, depending on the loan provider and the amount given.
Installment loans are a great option when you need some cash fast. The best part is most lenders don’t require you to have an excellent credit or offer any type of collateral for your loan to be approved. The application process also typically takes a short time, meaning you don’t have to burn the whole afternoon chasing for a loan at the bank. It’s generally a go-to loan option when you’re in a pinch.
More specifically, an online installment loan is a type of installment loan that is primarily applied for, processed and managed on an online platform by specialized lenders. Most borrowers find it easier and quicker to get an installment loan from online lenders than in person at traditional banks or credit unions.
With online installment loans, there is no need to leave your house or spend hours on long queues. Customers may also have an option to choose a schedule with smaller payments and pay over a longer period or larger payments and pay off their loan quickly. Additionally, you don’t need an excellent credit score as many online installment lenders could issue a loan for bad credit.
How Online Installment Loans Work
Applying for an online installment loan is a rather straightforward and stress-free process. The most important thing when it comes to online loan application is the ability of the borrower to repay the loan in time. If you match this requirement, your request is likely to be approved even if you have a less than perfect credit score. Most lenders will also require you to have a *U.S. bank account.
In most cases, lenders will not need to check your credit score if you’re taking a small installment loan. The online application form only requires some basic financial and personal information, which can be filled out in a matter of minutes. After approval, the lender may send money to your account within one business day. Moving forward, you will need to make regular weekly or monthly repayments as agreed in the repayment schedule.
Are there different types of installment loans?
Any time you think about getting a loan, chances are you’re already considering an installment loan. Installment loans are the most popular types of loans. This includes student loans, mortgages and car loans because they all are all repaid in clearly defined installments.
For the most part, online installment loan lenders will not put you at task to ascertain the need or reason why you’re applying for the loan. In fact, smaller, short-term loans can be used to cover pretty much any financial constrain you might be facing – medical charges, car repairs, house renovations, business, etc.
The most important thing is you know how much money you will need for each repayment and even when your last payment will be. And of course, you need to have a consistent income that will comfortably accommodate your repayment schedule.
Why should you use Installment loans?
Not everyone is lucky enough to have enough emergency cash at all times. Unexpected expenses such as car repairs or a broken garage door can leave you short on cash and struggle to meet your monthly expenses and bills. In such cases, many people turn to payday loans and other forms form of cash advances. However, Payday loans don’t have a flexible repayment schedule, you will be typically required to repay the whole amount plus interest on your next paycheck.
Online installment loans offer an excellent option for borrowers who need quick cash but cannot afford to repay everything in one lump sum. As earlier explained, installment loans are usually repaid over a longer period of time through smaller payments based on a defined schedule. Below are the major benefits;
1. Manageable and Flexible Payments
If you’ve ever taken a payday loan, you know that you’re usually required to pay in full on your next payday with no exception. In reality, this type of repayment arrangement can sometimes worsen your financial strain. An online installment loan, on the other hand, can be settled in smaller and easily manageable payments. You don’t have to pay the whole loan amount plus interest and charges on your next pay date.
The longer-term repayment schedule is mostly preferred by many people because it allows borrowers to repay their loan and still have sufficient money left over to cover their other monthly expenses. Some lenders even allow you to arrange a customized, flexible repayment plan that suits your financial status and needs.
2. Higher Loan Amount
Since installment loans allow for longer loan terms, lenders are able to offer larger loan amounts to their borrowers. For most people, these larger loan amounts can be sufficient to cover unexpected expenses or costlier emergencies. Being able to take a larger loan with a flexible repayment plan can also cushion you from the need of having to take multiple loans to in order to cover some costs.
Online installment loans are all about speed and quick availability. They are generally deposited in your account within one business day after approval. This quick access to funds can allow you to cover immediate, necessary expenses and gradually repay the loan in smaller, budget-friendly amounts.
Most direct lenders also offer online installment loans which you can quickly access via their online platform. The alternatives can take quite some time to receive and won’t cover you in emergency situations. The fact that most lenders don’t perform a credit check for small amounts also makes approvals even faster.
4. Reliable interest rates and predictable repayments
Installment loans come with a fixed interest rate across the loan term. This is appealing because you don’t have to worry about an increase in interest rates along the way which can substantially increase your repayment amounts. You will always know what you’re going to pay and even the date of your last payment.
5. 100% Confidentiality
As long as you’ve chosen a reputable lender, you’ve nothing to worry about when applying for a loan online. Most, if not all online lenders have integrated necessarily encryption and safety measures on their platform. This means that the information you share through the application form doesn’t land in the wrong hands or end up with unauthorized third parties.
6. Options for all credit ratings
As mentioned earlier, even with a less than perfect credit score, installment loans are not out of reach. Most companies offer loans that are suitable for different circumstances. Some have even loan options specifically for borrowers with bad credit. So if you’ve had money issues in the past, your loan application may still be approved as long as you can prove that you will be able to repay.
During application of the installment loan, you will need to provide your identity documents and your address. You may also be required to prove your income, so documents like your payslips may be helpful here. The lender you intend to borrow from will tell you the exact documents they need. Generally, very few documents are required when compared to applying for a loan in traditional banks.
When should you take an installment loan?
Before you even think of applying for an installment loan, it’s wise to first ensure that you’ve exhausted all other options. For instance, have you tried borrowing from your family and friends? Do you have something valuable, which you don’t use, and can sell? When you finally decide that an installment loan is the only remaining viable option, you need to search for a reputable lender.
Additionally, make sure that you’re only borrowing an amount that you actually need to help you get through the financial struggles you may be having. You should probably postpone that shopping spree to a different day. Always remember that the more you borrow, the more you will have to pay, regardless of whether the lender has offered a great deal on the interest rate.
We also suggest that you learn more about the repayment terms before you make the application. As you already know, the loan will be repaid in small amounts. So each month you’re going to make some payments according to the agreed schedule. As you apply for the loan, make sure that your projected future income will allow you to make the repayments without straining.
You will be asked by the lender to sign a contract that details your repayment scheme and what should happen if you fail or delay to make the agreed payments. Some lenders might penalize you if you delay in payments, but paying on time during the entire loan period will significantly improve your credit history. You really don’t have to do anything special –just make your payments in time.
Online installment loans offer a great financial relief when things are thick. The funds can help you navigate through a financial difficulty and give you ample time to make budget-friendly repayments over a longer time.
How to find the best online Installment Loan Lender
Having learned about the benefits of online installment loans and how they work, you must be in a good position now to decide if this is the best option for you. However, before you make that commitment, you need to make sure that you find a reputable and reliable lender to work with. Below are some of the tips on how to choose the best lender for your financial needs.
• Choose a Trusted Company: Before you settle with a particular lender, do some research to make sure they are trusted and preferred by most people. You, however, look beyond the reviews and testimonials posted on the company profile. If it’s recommended by most people and has received plenty of positive reviews on other platforms, you can consider applying for a loan with them.
• Contact of the Company: While the loan processing will be done predominantly online, the company needs to have a valid contact and physical address. This is important because you can easily contact or track them in case of any problem. Calling them will also give you an idea of the quality if their customer care service.
• Rates and Charges: before you apply for a loan from any installment loans company, you should take a careful look are their fees, interest rates, and other charges. Since rates differ among different companies, you want to go with the lowest rates with the best terms possible. Compare 3 to 5 companies and see which one offers the best rates. Most companies will typically charge an interest rate of between 7% and 16%, but anything above 20% should be regarded as extreme.
• Check the lender’s license: more than half of the states in the U.S. have enacted laws and policies that allow installment loan lenders to operate. And they are also required to acquire a license before they can operate in the state. The license is an indication that the company has been approved by the federal or state regulators and generally adheres to approved business practices. Most companies will display this licensing information outright somewhere on their website, others will readily provide it if you request for it.
• Examine their advertising practices: a reliable and reputable lender will engage in ethical and sound advertisement practices. They should clearly disclose their repayment expectations and interest rates as well as disclose any conditions or limitations of the loan so that you can have a chance to fully understand everything before accepting. If any important information is not disclosed, you should question them about it. At the same time, don’t forget to go through their fine print on their website (policies, Terms, and Conditions) and the terms on the application form.
If you’re in need of some quick funds, heading to a bank might not give you the quickest and most convenient solution to your financial struggles. An online installment loan offers the financial help as and when you need it. The best part is you don’t need to have an excellent credit history for your loan application to be approved. You should, however, determine if an installment loan is the best option before proceeding to apply. And when you do, remember to only work with a reputable organization.