Not everyone is lucky enough to have some cash lying in their accounts during a financial crisis. But, there’s always a way out of such situations, one of which is a loan.
However, by the time you find yourself in this trouble, it’s still possible to have already messed up your credit score. Not sure about your score? Contact your preferred credit reference agency to stay updated on your status.
Is your credit score poor? If so, this can reduce the number of potential lenders willing to help you out. Most of them require a credit of above 630 – below that is already considered weak.
But, don’t worry, since there are still options for you to consider when you want to pay up those emergency bills, even with a low credit score. This is where installment loans for bad credit come into play.
What’s An Installment Loan?
In simple words, this is a loan tailored for low-income earners and is repaid in small bits (installments). Usually, one can borrow anywhere between $1000 and $10,000, depending on the lender’s decision and some other factors.
Some of the factors considered include your employment history, income, and bank account.
As you can see, your credit is not taken into too much consideration. Although these loans are for those with bad credit, some lenders may require to meet a certain threshold.
So, how can you get installment loan for people with poor credit? You just have to find the right institution for you. If you meet their requirements, you can send an application. Once your application is approved, you’ll be able to borrow up a given amount.
This money is to be paid within a period of your choice, but of course, it’s dependent on the lender. Note that the interest will start to pile up from the first day the money is deposited in your account.
What Are The Advantages of Installment Loans?
Compared to payday loans, installment loans have proven to be beneficial. They are favorable from the amount available to the repayment period. Are you considering an installment loan for your poor credit?
Here are the benefits:
1. Poor Credit Score Doesn’t Impact Your Qualification
This fact is actually what makes an installment loan the best choice for most people. First, it’s important to note what constitutes a credit score. Of course, one of them is your previous repayment behavior. Remember, it’s possible to have a bad credit score even after repaying all your loans. Fortunately, you don’t have to be perfect to be considered for an installment loan.
What does the institution look for in your application? Some of the things that don’t appear in your credit score report include the bank balance and employment history. These are the factors, therefore, examined by an installment loan institution.
Your proof of identity and residence is also taken into account, given that some states or countries have different policies governing this field.
2. Higher Limit Than Payday Loans
If you’ve ever tried a payday loan, you’ll realize that the maximum amount one can borrow is $1000. Most companies share this limit, which can be less helpful for some people. Although, that’s not to say that payday loans aren’t helpful at all – since they are.
But, what if you have an emergency project that requires more cash and you don’t have it in your account? As mentioned above, installment loans are available from $1000 to $10,000, depending on your qualification and other factors already mentioned above. That amount should be enough to cover any emergency or project you have in mind.
3. You Can Repay In Installments
Although it isn’t necessarily the case, most people with poor credit scores are still finding their way to financially stabilize. As such, it can be quite difficult to raise enough money to repay the loans at once. Unfortunately, that’s what payday loans require you to do. On your next payday, all the amount you borrowed plus interest should be cleared.
Installment loans, on the other hand, allow you to schedule your repayment calendar provided it’s within a set period. It doesn’t matter how much you borrow – the burden is spread out over several months. This criterion helps you raise enough money and enjoy the benefits of whatever you borrowed.
However, keep in mind that as the repayment period lengthens, the interest paid may also rise.
4. Help Rebuild Your Credit Score
Imagine repaying all your loans, but the credit score is still below par. That means you’ll miss the chance to get another loan from your trusted firms. Luckily, there’s a way out, and it involves installment loans. Since anyone with a poor credit score can borrow, you can also take advantage.
Once you’ve taken this loan and repaid it on time, this information is recorded in your credit report. After a few months, you’ll realize that your scores are improving. This should help you regain the trust of your previous lenders.
5. Easy Application and Money On The Same Day
The best thing about these loans is that you can apply to them while seated at home; there are no redundant forms to fill out. All you need to do is provide some of your essential financial details, and the lender will take it from there.
If your application is approved quickly, you might receive the money immediately or after one day.
Should You Consider Getting An Installment Loan?
Absolutely! These loans are tailored for people with a bad credit score. If you’re one of them, then you can try them out.
The benefits include a wide range of options (from $1000 to $10,000), a long repayment period, and quick approval. They’re way better than payday loans, which can be quite stressful and demanding, especially if you’re a low-income earner.
However, it’s always important to practice financial discipline to improve your personal finance. Qualifying for a loan can be quite easy, and the excitement might mess up your plans. Therefore, make sure you think through before signing your next contract with a lender.