When you find yourself in a bind and can use fast cash, installment loans can be a manageable way of making ends meet, but they have their pros and cons.
The term installment loans might sound familiar, and you may have even used them in the past without realizing since there are several types.
When you borrow an installment loan, you agree to a set amount which is to be repaid according to a schedule of fixed monthly payment amounts until the principal, fees and interest have been paid. These payments are referred to as installments. The payments on such loans are usually monthly but the schedules can vary at times.
Common examples of installment loans include auto loans, mortgages and personal loans.
Online installment loans can sometimes be compared to payday loans, with a major difference being that payday loans require the full amount to be repaid on your next payday where installment loans are regularly scheduled payments from a few to several months.
Many lenders of online installment loans will accept bad credit and lower scores, and the criteria to whether your application is approved often depends on a few factors, but not necessarily your credit score. Depending on the lender, it can be as little as current debt and income, so they can assess the odds of whether you’ll repay the loan. Some refer to this type as no credit check installment loans, but the reality is that any lender does some kind of check. They might not all use credit bureaus, but they do checks of some kind.
Benefits of Installment Loans Online
Since online installment loans come with predictable monthly payments, it allows you to budget for them more easily until you pay off your loan. With a fixed amount due each month, you won’t have surprises in the payments or the monthly amount you owe.
With regular payments it’s easier to manage your cash flow and monthly expenses, An installment loan is almost like another bill with a predetermined amount that’s due each month.
Avoiding late payments and paying bills on time are a few factors to a credit score, and using installment loans responsibly can actually help to improve this. If you have bad credit, improving your credit score could put you in a position later to be eligible for other types of loans with better terms and rates.
The Down Side
It might be easier to manage the regular payments, but installment loans can come with higher interest at times. It really depends on the lender, amount borrowed, and in some cases your credit score. This is especially true when borrowing larger amounts. When it comes to smaller amounts for installment loans, these are typically better terms and payments than if you were to borrow a payday loan and there is the benefit of the total amount not being due all at once.
Alternatives for Installment Loans Online
If you are looking for installment loans or personal loans, the various banks and online lenders should be your first stop. But if you are looking more for small dollar loans such as under a thousand dollars then online direct lenders might be the right choice.
For those with bad credit, installment loans online are still an option for many. Other options include speaking with friends or family, speaking to your employer about an advance, or possibly selling something of value.
When considering installment loans, always make sure that you understand any terms that you might be agreeing to, the payments expected will be within your budget, and to not borrow more than you are able to afford and repay. By following these simple suggestions you should be able to borrow the money you need and repay it without running into problems.
Be sure to also review your installment loans agreement to make sure that you understand any fees or penalties involved prior to signing and that everything is crystal clear so that you may benefit from the loan with a full understanding and free of surprises later. Also ensure there is enough money in your account before each payment date so that you don’t have to deal with any overdraft fees that can occur when there is non sufficient funds for making your payments.