Taking out an installment loan involves borrowing a set amount of money that is disbursed in a lump sum, but can be slowly repaid over time. Typically, these loans have a fixed interest rate and also come with a fixed repayment sum that stays the same every month.
There are also several different types of installment loans to choose from that often vary from lender to lender. As such, it is always recommended that you take the time to shop around and compare loans before signing on the dotted line. There are also online brokers like the one named WeLoans, though being famous for payday loans with no credit checks for bad credit, you can also find installment loan options on that platform.
Such loan companies can often make it easy to apply for an installment loan, as you will only need to fill out an online application by providing basic information about yourself, your place of employment and your financial history. Once you’ve submitted the pre-approval form, your loan request will be distributed to multiple lenders at once for review.
Pros & Cons of Installment Loans
The biggest benefit of applying for an installment loan is they usually come with fixed interest rates. This means that throughout the life of the loan, your monthly payments will remain the same. In other words, you will always be aware of exactly how much you are required to pay each month, which often makes it easier to create a monthly budget for yourself.
Another benefit of taking out these loans is they can also make a big difference in helping you to improve your credit score, as long as you make your payments on time. In addition, installment loans typically come with lower interest rates, compared to most other loans, such as payday loans or credit cards.
However, there are some downsides to consider when applying for an installment loan. For starters, there is a high chance that any missed or late payments can result in higher interest rates, late payment fees or worse, being reported to the relevant credit bureaus.
Also, if you only make minimum payments, this can often extend the time it takes to completely pay off your loan and as a result, you are likely to pay more in interest than what you originally borrowed.
All in all, you should always carefully consider the risks and benefits that come with installment loans from WeLoans before you decide to borrow one.
Difference Between Secured And Unsecured Installment Loans?
An unsecured installment loan is a form of lending that is not backed by collateral, like a house or car. Most installment loans that you borrow will usually be unsecured, which means that should you end up defaulting, the lender is not legally capable of taking any of your assets.
However, the downside is that they will usually come with higher interest rates than secured loans since there’s a higher level of risk to the lender. It is also for this reason that you will often need to have a good credit score if you want to borrow an unsecured installment loan from a traditional lender like a bank.
On the other hand, a secured installment loan is where the borrower puts up collateral, like a car or home to secure funding. This means that if you fail to make your repayments on time, then the lender will be able to repossess the collateral to recover the money owed.
However, the benefit of these loans is that they typically have lower interest rates than unsecured loans, which makes them a more practical option for borrowers. Plus, they even allow you to access higher loan amounts since the level of risk to the lender is low.
Luckily, it is not that difficult to find a lender for both secured and unsecured installment loans, especially with the help of online loan services like WeLoans. This means that you no longer have to deal with long wait times and lengthy paperwork in banks to secure these types of loans nowadays.
How Is An Installment Loan Different From A Credit Card?
With an installment loan, you will usually get all the money upfront in a lump sum, with repayment being carried out over time on a scheduled basis. On the other hand, a credit card is a type of revolving credit, where you can access money at any time up to a certain amount.
In other words, you can keep borrowing cash, but the amount of available credit will keep getting lower until it is replenished and needs to be repaid. It is for this reason that credit cards are best suited for handling regular ongoing expenses, while installment loans are best suited to paying off large one-time expenses.
Can I Apply For Installment Loans With Bad Credit?
It can often be very difficult to get approved for a loan with a less-than-stellar credit score. That said, there are several lenders out there that are open to providing loans to borrowers with bad credit. For instance, you can use a credit broker like WeLoans to find and compare bad credit lenders without having to waste much time and effort. You can easily find online installment loans from the platform of WeLoans for your financial demands.
It is important to note that any legitimate loan provider will usually conduct a credit check before approving your funding. However, the difference between traditional lenders and bad credit lenders is that the latter is usually less interested in your credit score. Bad credit lenders are usually more focused on determining if you can afford to make your repayments on time. As such, you won’t have to worry about your credit history affecting your chances of approval.
Where To Apply For An Installment Loan?
You can usually obtain installment loans through traditional lending institutions like banks, credit unions or online lenders. However, each loan provider will usually come with its own key benefits and drawbacks to consider.
For instance, it is easier to apply for a loan from a bank than a credit union, as you will usually need to be a qualified member to access loans. However, banks will usually have very strict lending requirements that make it difficult to get approved for an installment loan. Furthermore, it will usually be easier to get more competitive interest rates from a credit union or even an online lender since they typically have lower overhead costs.
In this respect, online lenders are usually the best option for securing instalment loans. This is because most of these lenders use automated systems that offer simple application processes, instant loan approvals and faster loan processing times. On top of that, most online lenders are open to approving bad credit borrowers, which makes it easier to get funding.