So What is an Installment Loan Anyway?
An installment loan is only a fancy way of referring to a loan agreement where you agree to make scheduled payments over time. It refers to the repayment structure associated with your borrowing, for example your typical home mortgage is a 30 year installment loan because you agree to repay the balance in small chunks at scheduled intervals each month. Installment loans for bad scores are simply structured lending opportunities from lenders that work with people who have a bad financial history.
Will My Loan Get Approved With Bad Credit?
Having a bad FICO score is costly, frustrating, disheartening, and a nuisance, but it is NOT the end of the world. While it may seem that you will not be approved for any type of loan ever again, this is not the case as we will outline below. In fact there are various ways in which people with a bad FICO rating can apply and get approval for loans.
For cheaper loans you will face a more difficult application process, more stringent terms and a requirement for security or a higher interest rate. If you want to borrow money and fix your credit, your option is to work with the lenders available to you and reestablish your financial reputation as a borrower.
"Feel Cash In Your Pocket Again with More Time for Repayment..."
Of course, when it comes to your credit report your goal is to have as many positive items as possible and as few negative items in your history. Find out which company is our top recommended credit report repair service and start fixing your credit today to qualify for better loan offers.
While you work to remove the negative items being reported you can improve your credit scores by increasing the positive items reported.
It may feel like forever to fix your poor credit especially when you feel surrounded by insurmountable debts and obligations with no way to meet them in sight. If you take it one step at a time, I guarantee you will get there.
Bad FICO Rating Blues
One of the most dreadful situations that can happen when you have a bad rating is an emergency need for urgent cash. If your credit is bad enough, with bankruptcies, foreclosures, evictions and numerous defaults, financing loans the traditional way will not be approved. Especially in a need for quick cash, you will be rejected by conventional lending institutions and banks.
This is the point most people give up. The banks turned you away so it is impossible to get a loan right? Well... You actually have an option if you need to borrow money. In fact you have several options to choose from depending on your situation and need.
There exist a number of installment loans for bad credit people; loans specifically designed to give you a second chance financing opportunity in times of need.
Surprisingly the approval requirements are easy. Installment loans are a good option for people who need money and have been rejected by conventional lending institutions. The installment structure of the loan provides an organized consistent repayment schedule that is easy to manage and the approval requirements are easy in these specialized loans.
Installment Programs for Bad Scores
A payday loan is one of the fastest options if you need quick cash. There are many online and offline companies that provide this kind of loan. As the name implies, this loan is paid on an installment basis scheduled on every payday of the borrower. Your average payday loan will continue repayment as scheduled automatically until the balance is repayed.
Online installment payday loans are gaining in popularity because they provide a completely hassle free method of borrowing money.
To apply, you need only to register online and complete the application through the online application form, providing your information and bank account details so they can fund your loan.
Once the application has been submitted, approval will be made in a span of an hour or two.
Once approved, your money will be automatically credited to your bank account within a few hours. Your first scheduled payment will be due on your next payday; depending on the terms of your particlular loan applied for, payment will be automatically debited on the approved schedule, effectively in installments.
For more information you can review the FTC fact sheet of installment loan facts. This type of financing can be expensive, but they are extremely flexible, and easy to get approved. If you cannot meet an installment date, you can inform them to only deduct the interest from your account. Once you have enough money to payoff your debt, even if it is before the end of term, you may do so and rebates will be deducted from the balance of your loan.
A cash advance installment loan of this type comes with a few negatives that you should be aware of. First and foremost, payday loans are not the cheapest means of borrowing money. Borrowing costs are high, and the repayment periods are typically short.
On the other hand, the benefits of an installment loan of this type can outweigh the costs because you do not have to apply in person, and specially during emergency situation, the speed of funding has proven invaluable for a lot of borrowers.
In most cases, to be eligible for this kind of loan, you need to be a US citizen, employed with a minimum of $1,000 monthly income and have a valid bank account.
Secured Installment Loans for Bad Credit
This is a type of installment loan that can be approved provided that you have something that can be used as security in the event that you default on your scheduled payment installments.
There are a few ways a secured installment loan is usually structured. You can give the lender some collateral in the form of property with value. For example, real estate property and automobiles are two commonly accepted forms of collateral. The added security will entice lenders that would not otherwise lend money to people with a bad financial history. On the other hand, the collateral will be seized if you are not able to adhere to the agreement that you signed with the lending institution.
For small installment loans, there are lending companies that accept jewelry and small items with value like electronics and appliances as collateral for the proposed bad credit loan. A pawn shop taking high value items in return for a scheduled payment loan is an example of this type of secured installment loan.
These loans are not the best value in the world but can be especially helpful in a financial pinch.
Another option to secure your loan with the lender is to get a guarantor that will be willing to sign an agreement that in the event that you fail in paying for the loan, they will be the one to cover it for you. In this case, credit investigation and due diligence will be performed for your guarantor, but you and your poor credit history are able to sidestep the qualification process.
Your guarantor must have a good credit rating and must have a substantial income to be allowed to stand in security for your loan and sign with you.
Finally, some lending companies approve loans even without a guarantor or collateral provided that you pay a cash security deposit and agree to a higher interest rate on the money you borrow.
The rates are much higher than prevailing loan interest rates so make sure you have explored all other bad credit loan options before you pay too much.
Unsecured Installment Loans
In the case you have no property of value that can be used as collateral and no guarantor willing and available to sign with you, you can opt for unsecured installment loans for low credit.
Unsecured bad credit loans are provided by personal loan lenders, credit unions, consolidation lenders and government aid programs.
As loans go, this is deemed a high risk for lenders.
Since they have no guarantee that the money they let you borrow will be returned, it poses great risk on their investment. As such, expect a very high interest charge from lenders offering unsecured installment loans for bad credit.
Additionally it will rarely be offered a high loan amount exceeding $2000 or so unless you have a significant income that can be proved. It is also reasonable that the payment terms will be shorter compared to loans that are not as high risk. Normally, the loan period will last up to a maximum of six months.
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