Choosing the right lender for installment loans

Posted by Raven Stewart / Aug 14, 2017 / 1 Comment / Posted in Online Loans Guides

How to Choose Installment Loans from Direct Lenders
When looking for some funds to cover a financial gap, you’ll want to pay as little as possible for the extra fees. If nobody lends you money at zero percent, you can choose one of few options of installment loans given by a lender.

When people start searching online for installment loans for bad credit, most of them run into lenders who promise to lend a loan with no credit check or guaranteed approval. Although it sounds great, this is not true. can quickly provide a way out to escape this dilemma. Let us help you choose the right lender, otherwise, you may put your personal possessions at risk. We will reveal the challenges you may encounter.

Bank loans require good credit

When searching who to borrow money from, banks may come as a potential lender. They provide some of the best long term options available. Yet, obtaining a bad credit installment loan from a bank involves an elaborate scheme and often ends up with decline. It happens as most bank loans mainly rely on borrower’s FICO score* as a base of their lending approval. People who have current money troubles or have been financially negligent in past, have poor credit scores that raise doubts. It regards the debtor’ ability to pay back an unsecured loan.

* A FICO score is a special formula for computing the credit rating. It is a number used to predict your probability to pay back a loan on time. Based on this score, creditors make assessments such as whether to offer you a mortgage or a credit card. They are also used to regulate the interest rate you receive on a loan or credit card, and the credit limit.

The need of collateral for bad credit installment loans

If you manage to find a bank to approve you, you’ll have to provide collateral or a credit-worthy co-signer. If borrowers fail on secured loans, lenders may use the collateral to reduce or exclude the losses. Still, if your score is too low or if there are too many bad marks on your credit profile, the bank will likely deny you for a loan, even if you bring proof of collateral or a co-signer.

Your credit might be perfect, yet, there is nothing quick and easy about obtaining the money fast. The application process may last for weeks when it comes to banks. This is a great distress in case you are experiencing a financial pressure.

Alternatives to bank installment loans for people with poor credit also carry a few drawbacks

Credit Unions

For borrowers with low score, credit unions may have softer conditions than banks. Though, a bad credit installment loan from a credit union may demand a co-signer or collateral. Though, in case you make your monthly payments regularly, you have great chances to improve your credit history.

Finance Companies

Getting installment loan with a finance company may seem to be easier. They typically do not ask for pledge and have fewer requirements than banks. Yet, such companies charge higher APR and are not the best choice for instant decisions.

Payday Lenders

Nobody considers loans from this kind of businesses to be cheap. Besides, some payday loan companies who have earned a bad reputation in time, may affect your situation. Their short-term loans may spread abusive lending tactics that trap borrowers into endless debts. Yet, these companies are popular as they provide loans to people who find it tough to obtain cash because of their poor credit scores. Their perk consists of the ability to give almost instant reply offers, which is tempting when you need money fast. They also don’t ask for collateral.

Don’t get trapped when offered installment loans for bad credit

You may run into a situation when installment loans providers structure themselves as an attempt to avoid state laws that forbid standard cash loans. With such loans, you might have several payments, but they are often scheduled only days apart. The due date for the last installment is normally only a few weeks after you get your money and interest rates may be very high.

According to data from CFPB, 4 out of 5 payday loans are usually rolled over or renewed 1. Once debtors perform a series of renewals, they may stay in debt for months, often repaying a larger sum than initially owed. According to the Pew Charitable Trusts, most borrowers take eight loans annually and remain in debt for five months in year 2.

The solution is working with a fair and suitable lender

If there is no time to do the research and finding a reputable lender to borrow money from, the next best thing is to go with an online loan matching service. Be careful when choosing one and stick with a service that complies with the law and works with reliable partners. Like, for example. This way, you avoid the drawbacks mentioned above and can enjoy the money from an installment loan.

Works Cited
1 Consumer Financial protection Bureau. “CFPB Finds Four Out Of Five Payday Loans Are Rolled Over Or Renewed”
2 The Pew Charitable Trusts. “How Borrowers Choose and Repay Payday Loans
  1. @Jordan writes:

    I’ve been curious about same day loan approval. I’m glad you talked about being able to look out for traps with bad credit. I’m going to have to do some research and make sure that a same day loan doesn’t trap us! Thanks!

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