If you have spent any reasonable amount of time online searching for terms such as “online installment loans,” then you would have been confronted with sales pitches such as “instant payday loans,” “instant approval,” “no credit checks,” and “receive up to $$$$” among others.
While many of these sales pitches are not entirely true or false – they are subject to several terms or conditions – and here are facts you must know about online installment loans before applying for one. The better and assured you are about these facts the better equipped you are to make informed decisions whether “quick payday loans” are for you.
Installment loans are not to be confused with payday loans
Online installment loans are synonymous with online payday loans but they must not be confused with each other. Online installment loans are loans taken out from online lending companies and which must be repaid in agreed installments over a given period of time – sometimes up to six months, but online payday loans are usually to be repaid with your next month-end salary in a lump sum.
Installment loans can be secured or unsecured
Secured in this sense refers to collateral security as prerequisite for the loan. Installment loans can both be secured or unsecured depending on the type or purpose of the loan. You may have to secure the loan or offer up a collateral security if you are applying for mortgage or auto loans, in which case the lender is empowered to seize or sell off your collateral if you default in paying. But you may access unsecured loan if it is for a personal purpose – that is you need a personal loan which will be repaid with your month-end salary. In this case, the lender only ensures you’re gainfully employed and your monthly salary can cover for the loan without any troubles.
You can’t apply for installment loans outside your state
There are some conditions you must meet before you are qualified to be given installment loans. One is that you must be above 18 years and have a steady job. No one will give you an installment loan if you don’t have a steady job with good salary. Another condition is also that you must apply for loans within the state where you reside – meaning that you can’t apply for loans in Colorado when you’re resident in Ohio. There may be an exception to this when you apply online, but then you will have to provide your social security number and a current/checking or savings account.
There are applicable fees and fixed rates you must consider before proceeding
It is important to note that applying for installment loans will attract applicable fees because lenders are in business to make money. Sometimes there are fixed interest rates that mount up if the borrow defaults in paying in time. This means it is possible to ultimately pay more interest rates than the sum you have borrowed apart from the actual amount you borrow and have to pay back – where you fail to pay back over a number of months or years.
Installment loans helps you to maintain good credit score
Borrowers are often aware that they won’t be qualified to obtain loans if they have bad credit. So they strive to maintain good credit score before they apply for installment loans. Customers are also aware that their credit rating will become damaged if they default in paying or pay up late. The earlier you pay your loans in installments, the better your credit rating becomes.
Use online calculator tool and read the fine prints
Many online lenders have interest calculator tools which you can use to calculate how much you will pay back in interest over the length of time you choose. You only need to input the amount you desire to borrow and the length of time you wish to pay back to see the average amount of monthly due displayed to you. This is beneficial because sometimes you can borrow loans online by interacting with the online calculator and filling out the necessary forms and without speaking or chatting with anyone. Where terms and conditions are displayed on online lenders’ sites, it is advisable you read this first to be better apprised of all you need to know.
Investigate a loan company before applying to them
There are traditional lenders who operate like normal banks, but the rise of online banking has led to the abundance of loan lenders on the internet. Many online lenders are rogues and out to rip you off by charging you more fees and exacting higher interest rates. So you must investigate properly to ensure your chosen lender is accredited and licensed by the appropriate governing bodies before doing business with them.