Installment Loan with Bad Credit
When you think of installment loans, it is inevitable to first relate it to a bank. Installment loans are the common word used to describe loans offered by banks. The installment loans offered by banks are long-term loans offered to borrowers for various reasons like businesses, home loans, student loans and more, that the borrower has to eventually return over a certain period of time in installments.
Traditional lenders typically lend their loans to borrowers with good credit histories. According to them, the credit score of a borrower speaks volumes about their ability to repay a loan. If it’s a good one which hasn’t shown a default in the past, they’re good to go and get funded by them. On the other hand however, if they have defaulted in the past and come with a poor credit rating, they are considered to be high risk borrowers who in most likelihood shall not be funded by a traditional lender.
Since majority people relate to traditional lenders when they think of borrowing installment loans, and if they have bad credit, it seems to them that it is close to impossible to get an installment loan. That’s why, people believe that it is hard to find installment loans if they have bad credit.
However, what is yet to be known is that even direct lenders provide installment loans to people. Most people relate to payday loans when they think about direct lenders, since that’s how direct loan lending started.
What Are Payday Loans?
Payday loans are short-term loans offered by direct loan lenders to borrowers who need some extra funding, quickly. Even though they have slightly higher rates of interests than traditional installment loans do, they come with a number of benefits that seem appealing enough for people to go ahead with applying for them. These benefits include:
- 24 Hour Transfers
- Bad Credit Acceptability
- No collateral Requirement
- Simple Applications
- The Need for Basic Documents
- No Time-Consuming Procedures
- 24 Hour Access (in the case of online loan lenders)
The two most appealing traits about a payday loan are the fact that transfers are quick, and that bad credit holders are funded.
So, why do people look for installment loans, when payday loans have so much to offer?
The truth about a payday loan is that the terms of repayments state that one has to repay this kind of a loan on their next consecutive pay date, in wholesome. There are no flexible repayments. Although a few lenders do offer the option of extensions and rollovers, a borrower still has to repay such a loan in lump-sum which can make it quite heavy on the wallet.
It is due to this one characteristic that people do not prefer choosing payday loans as their source of borrowing money from. Some people get into debt traps due to such loans, while others have to really cut down on other expenses for a couple of months in order to compensate for the heavy loss of funds due to payday loans.
Installment Loans for Bad Credit Are Offered by Direct Loan Lenders
Due to the constant beating that payday loans had to face in the market, direct lenders decided to introduce installment loans too. Installment loans offered by direct loan lenders are similar to that of payday loans, with the only major difference being that they are easier to repay.
As the name suggests, these loans have to be repaid over the course of a few months in installments, and not in lump-sum, making it very easy for borrowers to repay without having to compromise on other day to day expenses.
When we say that these loans are similar to payday loans, we mean that installment loans from direct lenders come with every benefit that a payday loan has to offer, including offering these loans to bad credit holders.
So, if you want an installment loan but have bad credit, choosing to opt for one with an online loan lender like InstallmentLoanz is a great idea. You can Now get an installment loan even with bad credit, although not necessarily from a traditional lender.