In recent times, installment loans have experienced an increase in demand, primarily driven by their appeal to millennials who generally try to avoid any type of traditional debt. These kinds of loans are preferable to most other kinds of point-of-sale finance. This is because the applicants know exactly the amount of money they will be paying back when using installment loans in the USA. However, a lot of individuals are unaware of the potential advantage that installment loans can provide. Nowadays there are a lot of brokers and lenders that allow applicants to apply for Installment loans Online.
What Are Installment Loans USA & How Do They Work?
Installment loans refer to a specific type of loan where the applicant pays back the amount following a fixed payment plan. The payment plan specifies the number of installments the applicant will have to pay and the amount of each installment, as well as the period of the loan. They are fixed-rate loans as there is a fixed interest charged over the entire period from the time the loan is taken out. While the most popular form of installment loans are for retailers, it also covers mortgages and auto-loans.
When an applicant applies for an installment loan and it gets approved, he/she receives the borrowed amount or the item they are purchasing, instantly. Applicants will have to pay them off in installments which are regularly scheduled payments. They owe the same amount of money on each of the installments divided across several weeks months or even years. Installment loans allow borrowers to delay a significantly large yet unavoidable expense by making small payments. However, they also have to keep in mind that the interest rates are typically high. However, the short-term relief that the borrower gets makes up for the long-term costs.
Timely repayments of installment loans can assist in improving an applicant’s credit score as it adds on-time payment history to his/her credit report. However, this solely depends on making consistent, on-time payments to achieve any sustainable growth in one’s credit score. Installment loans are broadly classified into two types: Collateralized and non-collateralized. Loans that are collateralized require borrowers to pledge any asset or something valuable against the borrowed amount. On the other hand, non-collateralized loans do not require any pledging of an asset. Instead, the lender uses the borrower’s creditworthiness and ability to repay the loan to decide whether to grant the loan or not.
Pros and Cons of Installment Loans
Before deciding to apply for an installment loan, borrowers need to fully read the terms and conditions included, as well as be aware of the basic features of an installment loan. Like every other form of credit, installment loans have some pros as well as cons which are discussed in brief below.
Pros of Installment loans
- The terms of repayment
Installment loans are just like any other form of loan where the borrower has to repay the amount within a set time period. Depending on the broker or lender that the borrower approaches, the terms of repayment may be rigid or flexible. This is why it’s crucial for the borrower to determine exactly what he/she wants from the installment loan before applying for one.
- Paying off bit by bit
Aside from the fact that applicants get access to longer-term loans, they can also repay their debt in chunks instead of a lump sum amount. They only have to ensure that they have the ability to repay the loan within the given time period. Failure to pay the loan on time will not only damage their credit score but the interest accrued can add up pretty quickly.
- Can be applied easily
Installment loans are easier to apply for compared to other traditional forms of credit. Thanks to the advancement of internet connectivity, there is a myriad of ways one can apply for online installment loans. Most lenders do not delay in approving or disapproving loan applications. This makes it ideal for servicing unexpected expenditures such as medical bills, a sudden wedding a car breakdown, and others.
- Lenders do not discriminate
Lenders offering installment loans usually allow individuals irrespective of financial status to apply. It also gives individuals with bad credit a chance to repay their expenditures in the short term.
Cons of Installment Loans
- The hidden consequence of pre-payment
The nature of installment loans are such that it allows borrowers to repay it before the loan term ends. If a borrower is confident that he/she has the capacity to pay off the debt before the loan period ends, he/she should do so as it also saves interest. However, one has to also be aware of notorious lenders who include pre-payment fines in their terms and conditions.
- Increasing interest
Lenders who offer installment loans usually charge higher interest rates compared to traditional financing options as lenders take more risk. The interest payments accrue if the borrower takes a longer time to repay the loan. Individuals should always make sure that they have the ability to repay the loan before they apply for it. Failure to repay may result in negative effects on an individual’s credit score, limiting their ability to take out other lines of credit in the future.
Types of Installment Loans
Besides the broad classification mentioned above, there are various types of installment loans that one needs to be aware of. The terms and conditions of the loan depend on the lender, the terms of loans, and the type of loan the applicant is looking for. Some of the types of installment loans are mentioned in brief below.
Installment Loans Bad Credit
Installment loans for bad credit are provided by lenders to individuals with very thin or imperfect credit profiles. Typically these are applicable for individuals with a FICO score of below 630. Because the lenders have lower credit score requirements, they consider other information to evaluate the creditworthiness of an individual. This can include an individual’s existing debts, education level, employment status, past bank transaction details, and others.
Installment Loans No Credit Check
Installment loans with no credit check are loans offered to individuals whose credit-taking ability is limited by bad credit. Lenders offering such types of loans do not carry out credit checks on the borrowers, which makes them easily available.
To apply for a no credit check installment loan plan, an individual has to first submit an application with a lending company. He/she usually has to specify the reason for the loan application and may or may not involve collaterals.
Installment Loans Direct Lenders
Individuals can also go for installment loans directly from a lender. The rules are almost the same with other installment loans, in which the individual borrows a set amount that has to be paid back with interest.
Many borrowers prefer installment loans from direct lenders as it allows them to get lower interest rates and better terms than they would get if they approach a third-party broker.
Installment Loans Instant Approval
Many lenders and brokers offer installment loans with instant approval. In this case, the loan amount gets instantly credited to the borrower’s account when his/her application is approved. The time can range from few minutes to one working day.
Installment loans with instant approvals upto $5000 can be helpful for individuals who have to pay up immediately due to the circumstances, such as a sudden health emergency or accident.
Guaranteed Installment Loans
For guaranteed installment loans, a third party assumes or guarantees the debt obligation on behalf of the borrower. These loans are offered to individuals who are not suitable to be a candidate for a regular loan from banks or financial institutions.
In rare cases, the guaranteed installment loan is backed by an agency, which purchases the debt from the financial institution or lender. This way, it guarantees repayment of the loan in case the borrower defaults.
Tribal Installment Loans
Tribal installment loans are provided by tribal lenders that are applicable on specific sovereign land. These loans are run by Native American tribes and do not fall under the jurisdiction of normal United States laws. Due to these exemptions, tribal installment loans are sometimes a more flexible option to get access to credit.
These lenders allow borrowers to access financial services from a particular tribe’s area, adhering to tribal regulations. The Tribal Consumer Financial Services Regulatory Commission is responsible for regulating these loans and lenders.
Easy Approval Installment Loans
Many lenders provide installment loans that are easily approved. These loans do not involve lengthy background checks.
They are particularly ideal for individuals who are in a hurry to pay off credit which would otherwise be very costly to them.
Personal Installment Loans
Personal installment loans are personal loans that are to be paid within a fixed time frame and through regular payments.
Most personal installment loans are fixed-rate loans in the sense that the interest rate doesn’t change throughout the course of the loan.
Payday Installment Loans
Small Payday Installment Loans refer to the quick cash of a payday loan offered by some lenders, but with terms that allow the borrower to make the repayment in installments. Depending on the laws or restrictions present in the borrower’s area, this can range from just longer than a single-payment payday loan to a few years.
These loans are required to be repaid in multiple installments over the loan term, similar to other installment loans such as auto loans or traditional personal loans. However, payday installment loans may have APRs of more than 300% depending on laws in the borrower’s area.
Short Term Installment Loans
Short-term installment loans require the borrower to quickly pay off the loan, usually within 6 months, a year, or 18 months at maximum.
They are different than long-term installment loans which may have higher interest rates but are more flexible in their repayment terms.
Examples of Installment Loans
The following are some of the examples of installment loans that one would usually encounter.
Online Installment Loans for Federal Employees
Online installment loans for federal employees are designed only for people employed by the U.S. government, providing them access to favorable credit conditions.
Government employees such as postal employers or those in the military usually have low credit scores. Usually, this would disqualify them from accessing most forms of traditional credit. But with these online installment loans, they can easily borrow funds if they are a federal employee.
Installment Loans Online for Postal Workers
For individuals in the postal service sector such as those with the USPS, installment loans online can be a good option if they are looking for some additional money.
Postal installment loans are available for up to 5 years in either secured or unsecured forms. The lenders consider the individual’s share or certificate account as collateral.
Installment Loans for Veterans
Many veterans or former members of the United States Military struggle with less than perfect credit score, which disqualify them from getting loans approved. Luckily, these individuals can go for installment loans for veterans.
These loans provide special benefits such as tailored payment plans, personalized interest rates, and other features that can allow them to finance their next big purchase.
Installment Loans with a Cosigner
Individuals with a less than favorable credit score or credit history can take help of a cosigner to help them qualify. The cosigner is responsible in case the primary borrower fails as it serves as an additional repayment source for the lender.
With the help of a cosigner, the applicant can obtain the loan itself, as well as the terms of the loans.
Installment Loans with a savings account
There are direct lenders that may offer installment loans to individuals possessing a savings account, even though a checking account is preferred.
Lenders are more comfortable providing loans to these individuals as they have a saving account with a bank or financial institution, indicating a cordial client-bank relationship.
Installment Loans without a bank account
There are some lenders who provide installment loans to individuals who do not possess a bank account. However, these loans usually come with expensive terms.
Brokers or lenders require some sort of collateral or guarantee from the borrower and charge exorbitantly high-interest rates.
Installment Loans with prepaid debit card Installment Loans with high-interest rates
There are some lenders that provide prepaid debit cards as an alternative to traditional lines of credit. These loans are mostly applicable for individuals who do not have a checking or savings account.
Individuals taking out an installment loan with a prepaid card can use the card to pay for costs related to the outstanding debt.
Installment Loans with high-interest rates
Most lenders that offer installment loans charge higher interest rates than usual to make up for the risk they are taking.
Because these lenders deal with individuals with bad or no credit history, they offset that risk by charging exorbitant fees and higher interest rates that the borrowers should always be aware of.
Installment Loans without Direct Deposit
Some lenders offer installment loans that are unsecured and do not require any deposit or collateral of any kind from the borrower.
Borrowers applying for these loans should read the terms and conditions properly as they can include some hidden fees or charges that offset the risk being taken by the lender.
Installment Loans that accept child tax
The Canada Child Tax Benefit, which is now called the Canada Child Benefit, refers to a series of monthly, tax-free payments that are made to Canadian families to financially aid them to raise a child.
Canadian citizens can leverage the child tax benefit payments into a loan from some lenders. These are normally known as child tax credit loans and can be applied for online. They are usually approved within a day.
Installment Loans for rebuilding credit
Repaying an installment loan can assist in rebuilding an individual’s credit. However, the loan should be accessible at the individual’s current credit score, and be affordable to the individual in terms of origination fee, monthly payments, and interest rate.
Auto loans are the best form of installment loans that help individuals build credit. These lenders usually have less rigid underwriting conditions compared to mortgage loans.
Installment Loans for retirees
Retirees can opt for secured installment loans which require collateral. There are several lenders that offer cash-out loans, reverse mortgages, and car loans to retirees.
Retirees should be aware that these loans are risky should only be considered when there is a sudden emergency or unavoidable expense.
Installment Loans for Travel
Installment loans for vacations and travels are unsecured. They are often an expensive way to pay for one’s vacation.
Installment Loans for Teachers
Teachers of grade school, middle school, high school, and college can all be eligible for applying for an installment loan.
It may so happen that a teacher has just finished college before beginning his/her first job and doesn’t earn enough yet to cover the rental deposit at their house or apartment. Installment loans in such cases are ideal for such individuals.
Installment Loans for Uber drivers
Ride-sharing companies such as Uber, Lyft, and others do not offer special loan programs for their drivers and employees. Sometimes these individuals encounter a tough time finding access to lines of credit as most of them have a bad credit score or history.
Luckily there are lenders that can provide loans of up to $5000 to these individuals. Some even provide reasonably low-interest rates.
Installment loans for Unemployed
Several online lenders provide loans for the unemployed. Individuals who are unemployed may face difficulties while paying all the bills on time.
Such individuals can go for lenders who provide pay-day loans or installment loans without any credit checks.
Installment Loans for low income
Low-income individuals often find themselves in a cycle of poverty where they don’t earn enough to cover their expenses. They are disqualified from applying for a loan from most lenders because of their bad credit score or history.
Luckily, there are lenders that specifically offer installment loans to low-income families and individuals. However, the interest rates and payment terms vary from normal lenders.
Installment Loans for all credit types
Some lenders offer installment loans to both individuals with or without a good credit score. They look at other pieces of information regarding the applicant such as whether they have a source of income or have assets that could back the loan.
Normally such lenders charge high fees and interest for approving these loans as they are taking a lot of risks.
Installment loans for gig workers
Freelancers and gig workers who do not have a steady stream of income find it difficult to get loans approved from traditional banks and financial institutions because of their low credit ratings. These individuals can look for installment loans or payday loans from brokers such as heartpaydays.com as a viable alternative.
Installment loans for government workers
Under current U.S. laws, federal allotment loans can be applied by government workers to access lines of credit on good terms. There are also several lenders who provide short-term installment loans to government employees without performing any credit checks.
Installment loans for home improvement
Installment loans for home improvement can help any individual to meet expenses related to home renovations and repairs. They can use these loans to repair their roof, install a swimming pool or upgrade a kitchen. Many lenders let individuals take out loans for this purpose without having to put up their homes as collateral.
Installment loans for college students
Many students look for installment loans to meet living expenses while in college. As they aren’t employed yet, many traditional lenders do not provide loans to them. However, there are lenders that provide short-term installment loans to students.
Installment loans for military
Some credit providers and lenders provide personal installment loans to military personnel. These loans can be applied by any active-duty or career-retired military personal who serves or has served with the Marines, the Air force, the Navy, or the Army.
Installment loans using the simple interest method
Lenders provide simple interest installment loans which are amortizing. In other words, a portion of each payment that the borrower makes is allocated towards paying interest, while the rest of the amount is allocated towards the loan balance.
Features of Installment loans
Installment loans are characterized by certain features that make them different than traditional lines of credit.
- Predictable Payments
Installment loans involve predictable payments unlike a lot of other forms of credit. The core components of the borrower’s payment will likely remain the same every month when the applicant takes out a fixed-interest rate loan. With the payment amount and schedule predictable, individuals can better plan out their finances and minimize the chances of defaulting.
- Unrestricted Access
Installment loans are open to almost everyone as they do not involve rigid credit checks. The loan is ideal for salaried people who need instant cash but do not want to go through the complexities associated with other forms of credit. Thus installment loans provide unsecured access which allows an individual to receive the loan without depositing any collateral or security.
- Different from payday loans
Installment loans do not penalize applicants for paying off their loan amounts before the stipulated time. These types of loans provide a clear roadmap out of debt which helps applicants to pay off the debt through equal monthly payments of principal and interest.
- Different types of installment loans
Some of the most common forms of installment loans include mortgage loans, student loans, auto loans, and unsecured loans. Individuals who have a very good credit record can opt for unsecured loans from financial institutions and banks.
Charges and Penalties for Installment Loans
Most lenders charge their borrowers a collection of fees in addition to the interest of the loan. These can include the following:
- Loan origination fees
A loan origination fee is an upfront amount charged by the lender to process the borrower’s loan application and is compensation for executing the loan. They are usually expressed in terms of a percentage of the whole loan itself and generally range from 0.5% to 1% of a mortgage loan in the United States (for example).
- Application processing fee
This is a fee charged by the lender to simply process your application to have it one step away from getting it approved.
- Late payment fees
Lenders levy late fees whenever individuals fail to make their payments in accordance with the payback schedule. As installment loan payments are generally due on consecutive pay dates, failure to pay these installments can attract huge fees and late payments. There are negative consequences if an individual fails to make payments more than once or twice in a row.
Eligibility Criteria for the Installment Loans in the USA
Almost anyone is eligible for installment loans. Installment loans offered to individuals with a low credit rating do not have rigid requirements as in the case of normal loans. While the rules depend on the lender one is choosing, almost all of them want the applicant’s full name, social security number, birth date, and details about income.
If we take the case of heartpaydays.com which is a broker that provides installment loans, their eligibility criteria include the following.
- The age of the borrower should be 18 or older.
- The borrower must possess a valid mobile phone connection.
- He or she must have a valid email address.
- The borrower must be a United States bank account holder.
How to Apply Loans for Installment Loans in Quick Steps
Whether one chooses a broker or a lender to access installment loans, the signing up process is more or less the same. Let’s take the example of heartpaydays.com, a broker that connects applicants to lenders. The broker made it easy for anyone to sign up and access legitimate online installment loans as evident from the following simple steps.
- Choosing the loan amount
The first step for the borrower is to decide the amount of money they will request as a loan. They should absolutely be sure about what they want, as taking out multiple loans at a time can get costly. Applicants can choose up to $5000 as their loan amount at heartpaydays.com.
- Completing the application form
Most brokers and lenders offer the applicants a form to know more about them. In the case of heartpaydays.com, the form is short and uncomplicated, as it simply asks for the amount the applicant wants to borrow and the terms of the loan he/she would want.
- Waiting for the decision
After submitting the application, applicants must wait till heartpaydays.com reviews their application and take the necessary steps. Borrowers may be subject to credit checks during this stage of the registration, even though heartpaydays.com itself doesn’t carry out any credit checks. Since heartpaydays.com is a broker that has several lenders under its network, the lenders might use external credit scoring services to ascertain the applicant’s paying back ability.
- Get the loan approved
After the borrower has completed all the above steps, it is time for the appropriate lenders to perform security checks. After this is done, the borrower will get a notification from the broker that their loan amount is approved. Depending on the broker, the loan amount may be credited to the borrower’s account within a few hours or a day.
How to find the best installment loan rates in the USA?
The current market is filled with a host of lenders that provide installment loans with various different terms and conditions. However, there are a lot of predatory loan firms out there as well, who typically charge high rates of interest and do not have transparent terms and conditions.
To avoid this problem, borrowers will have a better chance of getting a loan with favorable conditions and terms if they approach a broker for quick installment loans. If a borrower chooses a broker like heartpaydays.com, then his/her chances of getting their loan approved, increase by a lot. This is because they are not at the mercy of a single lender’s approval. It is the broker’s responsibility to match the applicant’s form with an appropriate lender. The borrower does not have to go the extra mile of applying everywhere individually.
Choosing a broker like heartpaydays.com provides borrowers with a single point of contact to compare different rates from lenders. They save a lot of time through this method instead of individually signing up with each lender.
Choosing a broker instead of a lender provides applicants with a wide range of options when it comes to applying for installment loans. Brokers such as heatpaydays.com ensure that their clients receive the best loan offerings from lenders under its network. Because it provides a comprehensive platform, the chances of an applicant getting a loan when most other sources and institutions have denied them, increases by a lot.
Why choose installment loans?
Installment loans should be applied by individuals only when they are facing an economic emergency that they cannot delay any more. For example, personal installment loans are applied by borrowers to pay off expenses like sudden medical expenditures, wedding costs, and college tuitions, just to name a few.
Where can I get an installment loan with bad credit?
Nowadays, there are several online lenders and brokers that have tailored their services to suit the needs of individuals with low or no credit scores. Brokers such as heartpaydays.com provide applicants with the most chances of securing a loan as they work with lenders that specialize in low-credit-worthy individuals.
What can I use an installment loan for?
Borrowers taking out installment loans can use them for any expenditure that can be costly or isn’t possible to delay. This may include expenses related to sudden car breakdowns, medical emergencies, and wedding costs, just to name a few.
What are the eligibility requirements to receive an Installment loan?
As mentioned before, the eligibility criteria differ from lender to lender when it comes to installment loans. Normally, brokers and lenders that offer loans to individuals with low credit scores require the individual to be – over 18 years, the owner of a United States bank account, and have a valid email address and mobile phone number.
Can I Get A Bad Credit Installment Loan Without A Job?
Lenders and brokers that offer installment loans to individuals with no job, usually require a form of collateral. This can include any valuable asset such as a car or a house, depending on the terms of the loan.
How Do I know if an Installment Lender is Legitimate or a Scam?
It is up to the borrower to conduct research into the lender or broker’s background before they apply for a loan. He/she should go over the terms and conditions of the loan to evaluate whether there are any hidden fees. Brokers such as heartpaydays.com are authorized to provide individuals with loans for bad credit.
Where Can I Get A Bad Credit Loan in the USA?
For a US citizen interested in getting an installment loan with bad credit, they should look for appropriate lenders and brokers. There are numerous lenders and brokers who provide a way out for individuals struggling with bad credit when most financial institutions have ignored or turned down their loan requests.
How can I apply for Long term installment loans for bad credit loans near me?
To search for lenders that can provide a long-term installment loan for individuals with bad credit, a borrower must first search the net for shortlisting options. Alternatively, they can go for brokers such as heartpaydays.com where they can enter their desired amount and specify whether they want the loan for the short-term or long-term.
How Can I Apply For Bad Credit Loans?
After the borrower has selected a particular broker or lender, they must fill in the application form. The respective authorities will then go over his/her application and then decide whether to grant the loan or not. When granted, the borrower will receive a notification of their amount being credited to their bank account.
Is a Bad Credit Loan Right For Me?
Individuals should take out a bad credit loan only if they are absolutely sure that they can pay it back within the stipulated period. As these loans involve high rates in interest, failure to repay these loans on time can result in even further financial woes for the applicant.
How do installment loans affect your credit?
Installment loans give the borrower a fair chance to make regular on-time payments as the terms require them to pay in monthly installments. Timely payment of these installments can have a positive effect on one’s credit score. However, paying 30 days or late, or missing an entire payment can negatively affect your credit score.
Can I get an installment loan if I have bad credit?
Yes, there are specific lenders and brokers who have tailored their loans to provide them to individuals struggling with low credit scores and bad credit history
How to get out of high-interest installment loans?
If a borrower needs to get out of an installment loan that charges high interest, they can try the following remedies:
- The borrower can go for a debt settlement or payday loan consolidation program.
- He/she can prioritize high-interest loans first and ask for extended payment plans.
- The borrower can apply for a credit union payday alternative loan.
- He/she can go for non-profit credit counseling.
How to consolidate payday and installment loans?
A borrower can consolidate installment loans and payday loans by using a debt management plan. By getting a debt management plan from a nonprofit credit counseling agency, a borrower can negotiate lower interest rates and simply their payment structure.
What is the difference between payday loans and installment loans?
The term installment loans cover a broad range of personal, mortgage, and car loans that are usually longer-term in nature, requiring credit checks. Payday loans fall under installment loans. However, they are for the short-term and charge higher interest rates.
Why does your fico drop after paying off installment loans?
A borrowers who pays off installment loans like a car loan can actually cause his/her credit score to decrease. This is because the borrower has one less credit account in their name once they pay off the installment loan. It is important for a borrower to show that they can manage different forms of debt as having a mix of credit makes up 10% of an individual’s FICO score.
100% guaranteed tribal installment loans no matter what?
Tribal loans are special types of loans granted by Native American Tribes in the United States and are valid for use on specific sovereign Native American territory. Since they are not governed by normal United States laws, they have less stringent rules that allow borrowers to access direct installment loans and monthly installment loans. The debt collector or lender can try to take the borrower to a court or force him/her to pay if the loan isn’t repaid on time.