Online Installment Loans for Bad Credit
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Have you had enough of getting denied when applying for personal loans with poor credit? We have great news: you are in the right place. ASAP Finance understands the difficulties of people with poor and fair credit scores. Requesting extra cash through traditional financial institutions is often a true challenge for them. We are here to simplify your loan application and help you obtain online installment loans for bad credit.
What Are Installment Loans for Bad Credit?
An installment loan for bad credit is a loan paid in one lump sum and repaid with an interest rate and fees through equal monthly payments, also called installments. While people with credit scores below 700 often don’t qualify for personal loans from traditional banks, online lenders allow them to borrow installment loans despite their bad credit scores.
Due to a lower minimum credit score requirement and the lack of a hard credit inquiry through the three major credit bureaus (Equifax, Experian, and TransUnion), bad credit installment loans usually come with higher interest rates. If an installment loan lender approves you, be prepared to pay 6% to 36% APR (annual percentage rate).
How Do Personal Installment Loans for Bad Credit Work?
You can apply for personal installment loans for bad credit through credit unions or online lenders. You just need to submit an online application form and wait for a lender’s response. As a rule, lenders send approval decisions within 15 minutes.
If approved, you will get a loan agreement with the loan terms and conditions. After signing the contract, a lender will deposit the personal loan funds directly to your bank account the next business day.
Repayment terms for installment loans usually range between 2 and 24 months. To save on interest rates, you can repay your debt earlier. However, some lenders may charge you prepayment penalties, so make sure to read your contract carefully before signing.
How Do Bad Credit Installment Loans Affect Your Credit Score?
Installment loans can affect your credit score in different ways. Making on-time payments that will be reported to three major credit bureaus can improve your credit and show potential lenders your creditworthiness. At the same time, late or missed payments can hurt your credit. To ensure all the payments are made on time, you can use an autopay option, which is available at many lending companies.
Installment Loan vs. Payday Loan
Installment loans and payday loans are the most common financing options for bad credit borrowers. Whether you should choose the first or second type of loan depends on several factors.
With an installment loan, you can typically borrow from $500 to $5,000. It can be used for large expenses, such as home improvement, car repairs, debt consolidation, high medical bills, etc. At the same time, the maximum payday loan amount is $1,000. These loans typically cover minor costs, such as paying rent and utilities.
As installment loan amounts are more significant, they usually come with longer repayment terms, reaching several years. Payday lenders require repayment by a borrower’s next paycheck.
While payday loan providers require high interest, often reaching 400% APR, online lenders offer installment loans with interest rates of up to 36% APR.
Alternatives to Bad Credit Installment Loans
If a bad credit installment loan is not an option for you, you can consider many other alternatives.
Payday Alternative Loans (PALs)
Payday alternative loans are provided by credit unions and come with fixed interest rates of up to 28%. They are cheaper than traditional payday loans and come with more extended repayment terms, typically ranging from 3 to 6 months. However, you should be a credit union member to apply for a loan.
Secured Personal Loans
While it is generally challenging to obtain an unsecured personal loan without a good credit score, you can consider applying for a secured loan. Unlike unsecured loans, personal loans with collateral have lower minimum credit score requirements. You provide a lender with a valuable item, and the financial institution can seize it if you fail to repay your debt.
Paycheck Advance Apps
A paycheck advance app allows you to borrow small cash advances, typically of up to $500, by your next payday. Unlike other borrowing options, the apps usually come with no interest rates and fees. However, you may need to pay for membership to use their services.
Borrowing from Friends or Family
The safest and cheapest way to borrow money is to ask your family members or friends for help. They don’t need your credit history to lend you money. Your close people will not also charge you interest and other fees, unlike banks and other lenders. However, it is crucial to discuss the loan terms in advance and return your debt on time so as not to break your relationships.
Types of Installment Loans
Installment loans include many loan forms with small monthly payments. You can choose from the following options:
People usually apply for auto loans to purchase a vehicle. These are secured loans where your car serves as collateral. It means that if you fail your loan payments, a lender can seize your auto.
Online personal loans are the largest category of installment loans. You can use them for many purposes, from home improvement to debt consolidation. They can be both secured and unsecured and often require a good credit score from borrowers.
A mortgage is a loan for home purchases that can be taken for 15-30 years and is secured by the house you buy. It means that a lender can keep it if you miss your monthly payments. A mortgage can come with a fixed or variable interest rate, depending on the financial institution.
A student loan is designed to help students and their parents pay for college and its related costs, such as living expenses, fees, books, etc. These loans usually have convenient repayment terms, allowing you to return the debt within ten years of graduation.
BNPLs are a convenient way to purchase an item you can’t afford. They allow you to divide the cost into fixed monthly payments. You can even find plans free of interest charges and fees.
How to Get Personal Installment Loans for Bad Credit?
Take the following steps and obtain personal installment loans even with a bad credit score:
Check your credit report. Mistakes in the report are a common reason for lower credit scores. It is crucial to review it before applying and contact the credit bureaus if there are any errors.
Calculate your budget. It is important to calculate your income and expenses to understand how much you can pay monthly for an installment loan. Be careful with interest rates and fees to avoid any surprises. To see your APR and loan term, you can use an installment loan calculator.
Compare lenders. Search around and compare various personal loan lenders and their offers. Prequalification can help you understand your potential loan conditions. Pay attention to their loan terms, interest rates, and other charges to choose the best option.
Gather documentation. Prepare all the necessary documentation to apply for a loan. Lenders usually require proof of steady income, employment, and residency.
Submit your loan application. Fill out the application form at a chosen lender’s website and send your installment loan request.
Get a loan offer. If your personal loan request is approved, a lender will contact you and send an offer.
Sign a loan agreement. All the personal installment loan terms and conditions are generally described in a contract. Read it carefully and sign it if you agree with all the details.
Get funded. Lenders usually send installment loans directly to a borrower’s bank account as soon as the next business day after approval.
Tips for Getting Guaranteed Installment Loans for Bad Credit
It is easy to face extremely high interest rates and fees when applying for guaranteed installment loans for bad credit. The following tips will help you make your borrowing safer.
- Prequalify. Many lenders offer prequalification, allowing you to see your potential APR and loan term. It will help you find a loan at the most favorable terms.
- Calculate your monthly payment. With a personal loan calculator, you can determine your monthly payment for an installment loan with APRs and terms.
- Read customer’s reviews. Before applying through a lender, remember to read other customers’ reviews. They typically describe their experience with providers' interest charges, approval process, etc.
- Compare interest rates. People with poor credit generally borrow installment loans with high rates. However, even among bad credit score lenders, you can find those who can provide you with the necessary loan amount without charging unaffordable interest.
- Pay attention to fees. Many lenders charge prepayment penalties, late payment fees, origination fees, and other fees. But you can shop around to find providers that don’t require these costs or charge less.
Where can I get an installment loan with bad credit?
Installment loans are offered through various financial institutions, such as traditional banks, credit unions, and online lenders. However, banks usually reject people with a less-than-stellar credit score. Credit unions provide their services only to members. Therefore, online lenders are the most common borrowing option for bad credit.
What factors impact the interest rate for an installment loan?
Factors such as your credit score, loan amount, and repayment term impact your rates for an installment loan. The higher your credit score, the lower interest you can get.
When should I borrow guaranteed installment loans for bad credit direct lenders only?
People usually apply for installment loans to consolidate debt, repair their cars, improve their homes, cover unexpected medical expenses, etc. If you have a poor credit score, these loans can come with more competitive interest rates than guaranteed payday loans and other bad credit loans.
Can I return my installment loan early?
Yes, you can. Many lenders allow borrowers to pay off the debt earlier. However, you may be charged pre-penalty fees. Read your contract carefully to know about all the potential fees in advance.
Do direct lender installment loans for bad credit require a credit check?
All lenders perform a credit check to ensure you can repay the loan. Even so-called no-credit-check loans require a soft credit inquiry that allows a provider to see your income. Many providers conduct hard credit checks through credit bureaus to access your credit report.