What Are Installment Loans And How To Qualify For One?
With the advancement of the internet, the financial industry has undergone a lot of changes. The financial market is now very competitive as micro-financial institutions, online creditors, banks now devise alternative creative means to make their intending and already existing customers happy. As a result, financial aids like loans are now very easy to access.
It is no longer news that the common man finds it difficult to attend to sudden financial expenses as they are already faced with monthly bills to take care of. Due to this, they seek short term solutions to this challenge. They can easily access installment loan no credit check, coupled with a long repayment plan and this brought about the emergence of installment loans.
What are installment loans?
When you think of an installment loan, two things come to play: the potential to quickly and easily access loan and the long period given by the lenders to repay this loan. Thus, an installment loan can be defined as a loan that can be paid back using different payment schedules. Aside from lending from financial institutions, direct lenders is also a good option as most of them are popular and reliable.
Another distinct characterization of installment loans online is the tendency to have long term repayment periods. The interest rate on installment loans is also lower when compared to a payday installment loan. Also, the duration of payment is usually within a few months and sometimes even years.
These loans mostly cater to house maintenance, medical bills, among others. Long term installment loans can be paid back within 20-30 years base on the conditions of repayment, and it comes with mortgages. Small installment loans are short term loans, and they are not like long term loans that are secured with the pledging of collateral.
Kinds of installment loan
The regular kinds of installment loans are:
- Auto loans: In this type of installment loan, the borrower is required to pay back the loan within a given period of one to eight years. Though most lenders don’t provide options for a long duration period, it is essential to note that if you choose the long duration for the repayment of the loan, you are likely to pay smaller installments monthly but with a high-interest rate.The installment payment when you choose eight years repayment option will be smaller, but at the end of the term, the total money paid back will be higher than three years repayment plan.
- Mortgages: This is a long time installment loan that is required to be paid back within the stipulated time frame of twenty to thirty years, using monthly installments. If the option of an installment loan is a mortgage, the bank will either give you the home which stands as collateral or give you the money to purchase the structure.
- Personal loan: This method of installment loan is not secured, and it is short term. A personal loan is a short term loan applied online to meet various unexpected needs. The structure laid down for repayment is usually between one to eight years. Based on their short term, installment loan online with no credit check, their interest when compared to other kinds of installment loans is very high.This type of loan is also regarded as borrowings that are not secured, especially for creditors who offer bad credit installment loans. However, it is expected that when your application for an installment loan for bad credit is approved, you will be charged higher than those with positive credit ratings. The credit rating for non-secured credits greatly determines the interest rate.
- Students loan: It is a type of installment loan no credit check. They are mainly short to long term loans. In students loan, you tend to get a particular amount of money while still in school. That is, the student is expected to be credited with that particular amount throughout the entire duration in school.When the student graduates, he/she is likely to be given six months to payback. After this period, he is expected to start paying the loan back. This type of loan differs as some interest rates change while some interest rates are fixed. When unable to pay back the credit, a fixed fee is added to the amount borrowed as the penalty for defaulting.
Criteria to qualify for an installment loan
For you to be eligible for an installment loan, there are some basic requirements which you must meet:
- Evidence of income: Though this requirement is one of the basic requirements for installment loans, it doesn’t necessarily mean you should have four to nine jobs or own a big business. Instead, it implies that you must have a source of income like incapacitation proceeds, part-time job, or possibly welfare.
- The operational account is needed: Perhaps you don’t have an operational account, you should be qualified to get your money from those branches located in your area.
- An ID issued by the government: This is requested by the creditors to make sure you are of age. You need to be over eighteen years of age to be eligible for loan application.
- Current address: For you to be eligible for a loan application, you should be residing in the country where you plan taking a loan.
Ways on how to recognize the best installment loan
- Consider APR (annual percentage rate) and not just the interest rate: The APR attached to given credits, offers a better understanding of the real cost of the loan. This is so because the factual cost consists of the interest and the fees.
- Ponder on your credit card: Do you consider it as a better option? It is factual that the interest rate attached to a credit card is more significant when compared to a non-secured form of lending. However, it doesn’t apply when you are borrowing online as installment loan online no credit check will probably be cheaper, especially when you have not gotten to the set limit.
- Compare Creditors: It will be unfair if you settle for the first creditor you come across without weighing your options with different creditors. It is advisable to sample various lenders and settle for the best creditor whose terms are favorable.
- Don’t be deceived by long term payment: When creditors present you with the option of long term duration of repayment, ask of the interest rate. Such a loan comes with a huge interest rate, and you will end up paying more than necessary if you had chosen the same amount with a short term repayment period.
Though the smaller monthly installment might appear tempting, you will be amazed when you discover the amount you are expected to pay in the long run. However, the interest rate on an installment loan is not as high as that of a payday installment loan.
The amount financial institutions are willing to give you as an installment loan greatly determines your financial strength. If you have a record of always paying your debts, have excellent credit, and have a high income, the creditors can approve a huge amount of installment loans. However, some areas place restrictions on the total amount that can be borrowed. Resist from borrowing a huge amount of cash even if the creditor has approved it. Instead, borrow a small installment loan that is needed, and you can pay back comfortably.