Installment loans are not your typical kind of loan because unlike most personal loans or lines of credit issued by banks or credit unions, they don’t have the same strict approval process that many of these institutions have to follow. In fact, usually these loans are intended to help people whose credit would otherwise prevent them from getting traditional personal loans. Plus, they’re usually approved quicker and are made easier for borrowers to use for emergency expenses than most other loans. However, it’s important to know that credit history is still a factor when it comes to approving installment loans online.
Credit Is Checked Differently With Installment Loans
While it is possible to find a lender who offers loans free of credit checks or for those seeking bad credit loans, you should think twice before going that route. Many of these lenders either use predatory lending tactics, or in some cases they’re outright scam artists. But many legitimate installment loans will have a credit check of some kind, though it can be much different than regular hard credit checks that other lenders conduct when looking at your credit. Alternative credit checks usually weigh the following factors:
- A overview of what your past financial history has looked like
- Whether you’ve done well at making payments on time recently
- Your current ability to repay an installment loan
In other words, your FICO score number and general information from credit bureaus alone aren’t going to make or break your approval for an installment loan. The lender will usually want to know how you’ve been doing with payments in more recent days, and if your monthly income is more than enough to cover the payments. Often income is a more heavily weighted factor than credit on an installment loan application.
Why Installment Loans Are Usually Better Than Payday Loans Or Auto Title Loans
Installment loans are generally considered short-term loans because they are meant to be paid off much quicker than mortgages, business loans, and even auto loans in many cases. But they do offer longer payment terms than payday loans or auto title loans and usually a schedule that’s easier to work with. Payday loans are usually easy to be approved for, but you usually only get to borrow a few hundred dollars that has to be paid back along with all finance charges within a week or two. Auto title loans may offer a little more you can borrow and usually can be repaid in a month, but that’s still not a lot of time to repay and you’re also putting your car at risk of being seized if you fail to make your payments.
Installment loans will usually allow you to borrow more than payday loans though usually they’ll have lower caps than auto title loans. They usually last between six months to a year and have lower monthly payments than both payday loans and title loans. You also don’t need to offer any items as collateral to be approved for them, but you generally need to meet the following criteria:
1. Be at least 18 years of age and a legal US citizen or permanent resident
2. Show proof of employment/income
3. Have an active checking account in good standing
If you believe an installment loan would be right for you, you should apply with our lenders today.