A Quick Guide to Online Installment Loans: How to Apply & Get Approved
Have you tried applying for an installment loan? Getting a quick guide to online installment loans is easier and convenient than any type of loan.
If you are looking for a loan, applying online is a fast and convenient way to get quick cash. In this post, you’ll learn how you can apply for an unsecured loan and how you can get approved.
What are installment loans?
Installment loans are loans that you have to pay regularly on a monthly basis over a certain period. Since the application is done online, everything can be accomplished within a few hours to some days.
Different lenders offer different loan amounts and terms. All you need is to qualify first. Before getting the loan, ensure that you fully understand what it is, and how it works.
Types of Installment Loans:
- Auto loans. You can apply for an installment credit issued by banks, dealerships, and credit unions when getting a car. The interest rate usually ranges from 3 to 15 percent.
- Home loans. You can apply for a loan to pay your house on an installment basis. Payment is done between 15 and 30 years that can be either come with a fixed or adjustable interest.
- Personal loans. This is an unsecured type of loan offered by online lenders, banks and credit unions. It can be used for any purpose you want. It is repaid monthly with an interest rate of 6 to 36 percent in a period of up to five years.
- No credit check loans. Some lenders don’t do a hard credit check when you apply for the loan. However, you must be careful with these types of lenders because some may offer loans that come with very high interest.
Lenders may or may not ask for collateral in getting installment loans.
- Collateralized: An example is an auto loan where the car is the collateral for the loan. Another is a mortgage loan where the house is the collateral with the loan.
- Non-collateralized: You don’t need collateral to get approved for the loan. An example of this is unsecured loans like payday loans.
Loans that don’t require collateral are based on the borrower’s creditworthiness. On the other hand, loans that need one are based on their credit history. Moreover, if lenders don’t ask for collateral, expect to get higher interest rates.
What is the process for applying for installment loans?
- The borrower fills up the form on the lender’s website and submits the simple requirements.
- Once approved, the borrower receives details about the loan including the term of the loan, payment amounts, interest, fees, and payment schedules.
- The borrower pays the loan usually on a monthly basis through their bank account.
What are the advantages of getting the loan?
Since payment is predictable, you can prepare for the payment and avoid the hassle. The payment is consistent each month.
When you know the fixed amount to pay, you can manage your finances better. You can also refrain from late payments and incurring large fees and interest.
Repayment of your loan regularly can help you plan your finances. Since you know when you’ll start and finish your loan, it allows predictability on your budget.
Lastly, this type of loan comes with lock-in low-interest rates. If you are qualified and have a good credit standing, this loan can help you save a lot of money.
What are the disadvantages of getting the loan?
There are some predatory lenders that offer online installment loans for people with bad credit. However, don’t jump into this opportunity because you may end up paying more due to hidden costs.
It is not flexible like the other types of loans. When you get approved, there is no chance that you can renew or increase your loan. You need to apply for a new one.
Another thing is that the terms and interest rates can depend on your credit profile. If you have bad credit in the past, you can suffer the consequences of paying higher interest than other borrowers who have good credit scores.
While you may be trapped in getting installment loans online, you need to weigh things up first. You may consider other options like credit unions, payday alternative loans, or credit-builder loans that offer lower interest rates.
