Installment loans help you to borrow money which needs to be repaid as per a pre-decided schedule. Some lenders offer installment loans to lender with zero or negative credit scores. And, while these installment loans for bad credit may offer better benefits in comparison to the other loans such as payday loans, you may still have to pay high interest rates and fees.
Installment loan is all about setting a timeline to repay a loan. Monthly payouts are made to repay the loan in the desired schedule. Though installment loans are lot more common now, but not all are beneficial. With a good credit rating, you can easily get approval for a loan and also enjoy better interest rates. However, even with a bad credit score, you can get the installment loan but with a higher interest rate.
When you are going to shop for any loan, it is essential to know where your credit stands. Here you should know about installment loans for bad credit.
Installment loans for bad credit are majorly personal loan made for those with low credit rating, negative credit score or literally no credit history.
There are online lenders who offer loans to borrowers with low credit rating. The loan for credit challenged people may be against a collateral security or without any collateral security. However, high interest rates are common in both secured and unsecured installment loans for people with bad credit score.
Major features of installment loans for bad credit:
- Loan amount ranges from hundreds of dollars to a several thousand.
- Repayment schedule includes a series of payments over a decided time schedule, ranging from a few months to some years.
- It could include fixed interest rates or variable interest rates.
The rate of interest and the payment tenure may differ from one lender to another, but bad credit installment loans usually offer:
High rate of interest: Lenders may charge higher rate of interests from borrowers with poor credit rating in comparison to the ones with strong credit. For instance, a lender may design specific loan tenure depending on the credit history of the borrower.
Higher fees: Every person loan has some fees involved, and the installment loans with bad credit have higher fees. For instance, a lender offering installment loans for bad credit may charge administrative fees from someone with low credit score while not charge any administrative fees from someone with high credit score.
Eligibility criteria:
Usually the eligibility criteria for installment loans for bad credit differ from one lender to another. However, some of the details which are mandatory are given below:
- Your name
- Your age and identity proof
- Your social security number
- Your income details
Once you have submitted your details, the lender will verify them and go for a hard or soft credit inquiry. Once the enquiry is done, your loan will get approval and eventually you will get the amount transferred to your bank account on the same day or the following day.