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Best Installment Loans for Bad Credit – 2020

An installment loan for bad credit is a type of loan that is typically repaid over several scheduled payments that can last anywhere from 90 days to 7 years. Maximum loan amounts vary from lender to lender, but many go as high as $40,000. Popular amounts are $2,000, $5,000 and up to $10,000.

For those with a low credit score, getting approved for loans can be challenging. There are many lenders out there offering loans for bad credit fortunately. Installment loans for bad credit can be a wise choice.

Installment loans offer reasonable fixed interest rates and structured monthly payments based on loan terms, loan amount and APR. A regular monthly installment will avoid stressful balloon payments associated with other types of loans such as short-term payday loans.

The terms and conditions of installment loans also tend to be more flexible, making them a more accessible option for a customer with bad credit.

Installment loans for bad credit are generally more short-term than similarly structured personal loans. The duration of installment loans can be as short as 90 days or can last up to 7 years. Amounts ranging from $2,000 up to as much as $40,000 can be borrowed, depending on the lender. Monthly payments include both principal and interest, allowing you to chip away at the principal sum from day 1.

Why you should choose an Installment Loan over a Payday Loan

On this site we’ll explain why you should choose an installment loan for bad credit over a payday loan, and we’ll show you the lenders whom we consider to be the best in the industry.

Installment Loan for bad credit advantages compared to Payday loans

  • Higher loan amounts, common amounts range from $2,000 to $5,000 or higher
  • Longer repayment plans – Easier to repay
  • Lower monthly payments (if you choose a longer loan term)

In 2020 the popularity of online installment loans for bad credit increased, and now more and more lenders are moving away from payday loans and are instead offering installment loans to customers. Installment loans are simply easier to repay. Unlike payday loans where you have one huge balloon payment due by your next paycheck, installment loans offer you the choice to have longer loan terms so you can have smaller monthly payments. For many Americans, this is a much safer option than having to pay one huge lump sum by their next paycheck.

Two options for Bad Credit Loans

The number of available loans is almost endless, so we’ve created two lists: one list for borrowers with bad or good credit score that needs an installment loan, and the other for borrowers that are looking for a short payday loan. For borrowers with low credit score, the requirements are few and easy to meet, but the interest rates are higher compared to loans offered to those with better credit. Borrowers with good credit will have more requirements to meet (some of which are difficult to obtain), but, consequently, will have better interest rates and will save more money in the long run.

Guaranteed Installment Loans for Bad Credit?

Unfortunately, there are no “guaranteed installment loans for bad credit, with no credit check and instant approval,” BUT different lenders do have different requirements. This means that, even if one lender says no to your loan application, there is always a chance another lender will say yes.

Installment Loans for Bad Credit explained

Money (dollars) from Installment loans for Bad creditIf you need a quick and easy way to get cash, an online installment loan for bad credit may be just the thing for you. With loans as small as $1000, $1500, or even $2000, and in many cases as high as $5,000 or $10,000, installment loans are the way to go. Many lenders accept a broad range of credit scores, so you very likely have a chance to qualify, even with a low credit.

Relatively new to the public eye, installment loans have been around for a long time. If you’ve taken out a long term loan like a mortgage, car loan, or student loan, then you understand the basics of installment loans. You have a specific loan term (length of time you’ll be making payments) and a set amount you pay each month. In most cases, your interest rate is fixed, and so a portion of each monthly payment goes towards both principal and interest. As far as other fast money loans, installment loans are much more easily managed and can be as short or long as you need.

Why not a Payday Loan instead?

For years people in need of a quick turnaround for cash have gone to payday lenders. The problem with payday loans, however, is the large lump sum you’re expected to fork over on your next paycheck. Many people can’t afford it, and will get caught in cycle after cycle of indebtedness.

Luckily, it doesn’t have to be that way. Installment loans are often unsecured, meaning you don’t need to provide any collateral which is good. Many lenders also use what is called an alternative credit check, they only ask for a pay stub. This means no credit check at major credit bureaus.. Also lenders instead of performing a hard pull on your credit report, which is then listed for two years and dings your score, they may just do a soft pull. Even better, some installment lenders only require proof of income as part of the application process.

Another perk with installment loans? You can oftentimes get same day deposit. You may need to meet a few requirements and can increase your chances by pulling together your supporting documentation before you apply. That expedites the entire process so you can get your cash as soon as possible.

Payback your payday loans with Installment Loans for Bad Credit

Payday loans have balloon payments at the end that many borrowers are unable to pay. Rather than paying little by little, you have to set your own pace at saving a large amount of money over a short period of time. Installment loans don’t do this, and are much easier to handle during the repayment process. Although monthly payments are based off of the loan amount, APR (the interest rate for a whole year), and selected loan term, they are almost always more manageable than a payday loan.

It should be no surprise, then, that a majority of borrowers who have taken out both kinds of loan vastly prefer installment loans over payday loans. The stress of payday loans simply isn’t there with installment loans. Plus, you can look at different repayment options during the application process to make sure you choose terms that fit your monthly budget. You can usually get pre-approved with no hard check on your credit report.

 

Use Installment Loans to build a better credit score

Though payday loans can help build your credit score in some instances (and incrementally at best), they don’t have nearly as much impact as installment loans for bad credit. Plus, many payday lenders don’t report on-time payments to the credit bureaus anyway.

Even if they do, just think about it: if you have to repay an entire loan in two weeks or less, you’re not going to have the same kind of payment history as you would get with an installment loan. Installment loan payments are much easier to handle, and you have plenty of time to pay them off over regular increments. Make those payments on time, and you’ll have a slew of positive marks in your credit history that can build upon themselves.

You’ll also get points for adding to your credit diversity. Credit scores and credit reports are nothing but ways to illustrate to lenders that you are a responsible borrower. They show that you have both the ability and the will to pay back your debts. When you have a low credit score, you may end up with an expensive loan. High credit score and you get a better interest rate.

Boosting your credit doesn’t happen overnight, but it can happen over a few months. Pay back your installment loan on time without any delinquent payments, and your score will begin to improve. There are few other ways that can have such positive results in a relatively short time period.

Improve Your Credit Score

Although installment loans can be a viable option for those with bad credit, it is still very helpful to improve your score as much as possible. You might have a bad credit score right now, but there are several ways to boost your credit score and improve your finance options over time.

Knowing your credit score can be extremely helpful when searching for a loan. You can find your credit report at AnnualCreditReport.com, this information is used to create your credit score. To see your credit score, you need to pay a small fee at one of the major credit bureaus Experian, Equifax and TransUnion. But it’s well worth it.

Here’s five ways to boost your credit score:

  1. Increase Credit Card Payments: The amount owed on your credit card versus the credit available is referred to as your debt-to-credit (DTC) ratio. Credit bureaus will take this into account when calculating your credit score, with a ratio of 30% or less considered optimum. If, for example, you have a limit of $12,000 on your card and your balance is more than $4,000 your DTC ratio will be over 30%. This will negatively affect your loan application. Making a bigger payment to bring the amount owed under $4,000, and therefore under 30%, will improve your chances of getting approved. If you can get it down as low as 8% even better but never have it at zero.
  2. Debt Consolidation: All credit cards in your name will be taken into account by credit agencies. This will affect your credit score. Clearing all smaller debts and consolidating them all onto a single card can help. Make sure it doesn’t drive the ratio over 30% though. Maintain the zero balance on your old cards to verify your credit history and also to maintain an optimum debt-to-credit ratio. It may seem contrary to the previous point but if you only have one credit card, consider adding another one or two. Over time this can greatly improve your credit score. This increases your available credit and by extension reduces your debt-to-credit ratio. Keep in mind with this point, if you’re relatively new to credit cards don’t open multiple accounts in quick succession. New accounts will lower your average account age which will impact your credit score.
  3. Pay Balances Early: Credit reporting generally happens before the bills are issued. This can mean that, even if you clear your balance as soon as the bill is issued, it may already be registered as a high balance. A handy tip is to find out when your credit card reports to the bureaus and consider this your due date going forward.
  4. Minimize Loan Applications: There are two types of checks applied during a loan application. Soft and hard credit checks. Soft checks are performed at the pre-approval stage and do not affect your score. However, a hard credit check will be flagged and will lower your credit score. A hard credit check is an unavoidable part of the loans process which normally takes place after pre-approval. When applying for loans, make sure they don’t run any hard checks before they have pre-approved you.

Monthly Installment Loans – Things to consider before taking out a loan

There a lot of direct lenders out there these days offering installment loans with quick turnaround times and low monthly payments. Many former payday lenders have simply shifted their business models to accommodate public demand, so just because they’re offering installment loans doesn’t mean it’s in your best interest to go with them.

Many installment loan companies significantly lengthen their loan terms, but they’re not doing so to lower payments. All that interest collected over months and months can really start to add up. In fact, this can cause the cost of normal loans to increase by as much as four times.

Another thing many companies are doing is offering borrowers the chance to refinance. But be aware, this is not always in the borrower’s best interest with a small loan. They’re charging high interest rates for borrowers to refinance, most of which are increasing the borrower’s debt even more. Do your due diligence when it comes to finding the right installment lender. While there are some predatory lenders, there are also very reputable lenders offering fair loan terms to borrowers like you.

Requirements for Installment Loans for Bad Credit

For those with bad credit scores, lenders have fewer requirements that are easy to meet. The downside of this is that the interest rates on offer are higher compared to installment loans offered to customers with a higher credit score.

Standard requirements for installment loans relate to monthly income and applicant’s age.

  • Lenders require a minimum monthly income of $800. The recommended monthly income, however, is $2,000. You will be required to produce income verification as part of the application process.
  • The other standard requirement for installment loans is that all applicants are over 18 years of age. Again, although this is the minimum age, lenders will favor applications from those 21 years or older.

Lenders will offer borrowers with a credit score of 600 or more lower interest rates for installment loans. This will save a substantial amount of money in the long term. Initially, however, the requirements will be more stringent to be able to secure that low interest rate.

Monthly Installment Loans With no Credit Check from Direct Lenders

Eligibility criteria for installment loans tend to be less rigid than with personal loans. For this reason, monthly installment loans with no credit check from direct lenders are commonly sought by those with a low credit score. After several rejections, you might be wondering if there are any lenders that can accept a low credit score application.

It’s important to note that no lender can guarantee the approval of an installment loan. It is always possible to get turned down, even if you appear to tick all the boxes. Try to avoid getting discouraged though.

Each lender will have different criteria. Where one lender may turn down your installment loan application another may approve you under the same criteria. For this reason, it’s important to throw the net as wide as possible and apply to different lenders.

If you’re applying to individual direct lenders this can be a time-consuming process. Furthermore, multiple applications may negatively impact your credit score. If you go through a connector or mortgage broker, multiple applications can be completed quickly and efficiently. This improves your chances of getting your installment loan approved and leaves you open to better terms and conditions.

Can I Get a Loan with a 500 Credit Score?

It is always possible to get an installment loan with a bad credit score. You may find that you’re limited to smaller amounts though. In addition, lower credit scores usually incur higher interest rates due to the perceived increase in risk to the lender.

If you’re considering borrowing, your best option is to try and improve your credit score before you apply. Even a bad credit can be improved. This might delay you in the short-term but in the long run, it will save you a significant amount of money, however.

If you’ve already been turned down you can always improve your score and reapply. A repeat application will generally not affect your score or offered interest rate.

How Can I Get a Guaranteed Instant Loan Online?

Some lenders might be offering guaranteed or instant loans. But remember no lender is in a position to offer a guaranteed same-day loan. Funds transfer times for installment loans will vary considerably depending on the amount in question and the financial institutions processing the payment. Lenders usually process new loans the same day or next business day.

We can help you find the Best Online Installment Loans

Wondering where to find the best installment loans? We’ve gone through the installment lenders in each state, and have read through and compared all of their rates and fees. This means if we’ve listed them on our site, we consider them safe for business.

Taking out an installment loan can in many cases be easy. With a bit of research and a good partner standing behind you, you can meet any financial emergency with an installment loan that truly works for you.

References
https://en.wikipedia.org/wiki/Installment_loan
Lender survey
https://en.wikipedia.org/wiki/Unsecured_debt
https://www.debt.org/credit/unsecured/

Writer

Lauren Ward is a widely featured author with her work gaining a presence on top media outlets like CBS News. She has been in the content writing business for almost a decade. She writes attention-grabbing content focusing on subjects like personal finance and lending. Read more >