Installment loans are the most common type of loans available online. They are both personal and commercial loans that require regular payment using a series of payments from the borrower. When you apply for installment loan online, you will be required to pay back over a period of time.
Some installment loans online are designed to attract people who already have a bad credit; this is because they are less heavily regulated than payday loans. Check this blog post about installment loans online.
Therefore, you should be cautious of the installment loan online you are interested in because it could come with unfavourable terms.
Applying for an installment loan online is easy and faster as you can get your loan even with a bad credit.
However, there are lots of online installment loan lenders that seek to attract ignorant borrowers that have less knowledge of installment loans. They do this by repackaging a payday loan as an installment loan so as to appear less risky.
Therefore, this article is aimed at enlightening you on the factors to put in consideration when seeking an installment loan online.
BENEFITS OF AN ONLINE INSTALLMENT LOAN
Getting an installment loan online even with a bad credit is as easy as getting a payday loan but with a longer repay time!
These are the benefits of getting an online installment loan:
- Convenient application process: Applying for an online installment loan is easy and convenient as it usually takes a couple of minutes to apply and process your request.
Getting an online installment loan is now easier than ever as some online installment loan lenders have smartphone apps that you can use to apply for installment loans.
- Quick funding: Within a few minutes of applying for an installment loan online, you can learn of your application status. And if approved, you will accept the loan contract immediately.
After accepting the loan contract, you should expect the money in your bank account as quickly as the next working day.
- Bad credit applicants are accepted: Bad credit can not prevent you from getting an online installment loan as the requirements for lending are slightly more relaxed.
Online installment loans lenders do not usually make inquiries on your credit score, but you will need to show how you’ll be able to pay the loan back.
- Manageable repayments structure: Unlike short-term and payday loans that require you to repay by your next payday, you can repay installment loans over a longer period of time. Some lenders even give you the option of paying either twice or once in a month.
- Qualification for installment loan: Applicants of online installment loan do not necessarily need to be on a full-time employment.
But you must have a source of income that you can use to repay the loan whether it is a welfare, pension or a part-time job.
HOW TO QUALIFY FOR AN ONLINE INSTALLMENT LOAN
There are some requirements that you need to have in order to apply for an online installment loan -like other loans.
In order to qualify for an online installment loan with online installment loan lenders, you generally need to meet the following requirements:
- Proof of income: The first requirement to qualify for an online installment loan is a job, whether full-time or part-time. You just need to prove that you can repay the loan.
The flexible payment system that most online lenders present make online installment loans available to all with different income structures.
- Have an active bank account: You also need an active bank account that you can use to receive the loan. Once your application is approved, you should see the money in your bank account.
However, if you do not have a bank account, you can get your loan from a physical branch location.
- Valid government-issued ID: A valid government-issued document will be required in order to qualify for an online installment loan.
This is to ascertain your age, to meet the age requirement. Typically, you’ll need to be in the age of majority in your province – which is usually 18 years of age.
- Collateral: You’ll need to provide a collateral to the online lender and proof of ownership.
The collateral is essential in the loan application process as the lender will take over the collateral in the event of default payment after the stipulated period of time.
- Credit report: The lender will also request for the borrower’s credit report to get information about the borrower’s credit history for the past years.
If the lender is satisfied that the borrower is creditworthy, the application will be approved.
But if the lender finds that the borrower is not creditworthy, it can choose to reject the application or extend credit but put a high interest rate for the increased risk.
5 FACTORS TO CONSIDER IN ONLINE INSTALLMENT LOAN
There are plenty of online installment loan lenders that seek to attract ignorant people to apply for installment loans online and eventually get them in financial trouble.
They do this by repackaging payday loans as installment loans so as to attract people and look less risky.
Like payday loans, installment loans come with high interest rates and they have similar features- which can act as debt traps.
Therefore, before applying for an online installment loan, consider the following factors:
- Loan renewal options: You have to consider whether your lender allows renewal or “rollover” of your loan if you can’t pay it off on time.
If your lender doesn’t present you with this option, you should look somewhere else because you will eventually fall in debt if you receive the loan.
- Don’t be tricked by long terms: Most lenders offer you a long-term loan repayment period. They tend to offer high intrest loans with long terms.
This may reduce your monthly repayment but you could end up paying twice the amount you borrowed, or even more – if you take the entire stipulated time to pay.
You should try going for the shortest loan term you can afford. Because the faster you repay your loan, the more money you save in interest payments.
- Speed of loan application process: You should also consider the speed at which your application will be processed. You should consider if your installment loan will be available by the time you need it?
Fast loans can be more expensive, but the low interest rate and fees aren’t of much help if you need cash as quickly as possible.
- Loan amount: This factor likely depends on the local laws, as loans are territorially regulated.
The maximum loan amount also depends on both the lender and government laws.
- Collateral: Installment loans can either be with a collateral or not.
You should put in consideration the kind of installment loan you’re applying for to know whether a collateral is needed for the loan or not.
BOTTOMLINE
Getting an online installment loan can trigger doubts in the mind of many. But with the factors that have been explained in this article to look out for, the application and collection of a loan online is made easier.
You should compare online installment loan lenders and their charges to know the best. Online installment loan lenders offer low and friendly interest rates that enable you to pay off the loan within a short period of time.
I hope this article has enlightened you on the great benefits and what to consider in installment loans online.
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