Personal installment loans let you borrow money for several months or even as long as two or three years. You can get a personal installment loan even if you have bad credit. They can range from a couple hundred dollars up to $5,000, though the easiest to get are under $1,000. You can receive the money quickly, sometimes the same day or within 24 hours, deposited directly in your bank account.
Installment loans differ from payday loans, because they don't come due all at once. You pay them back in several smaller installments each month or each payday.
Banks and credit unions offer personal installment loans, but you can also get them online from companies that specialize in loans. If you have bad credit and have been turned down by a bank or credit union, there are still lenders who are glad to work with you. Their interest rates are higher--sometimes much higher--but even if your credit score is under 500 or you have a few hundred dollars already in collections or an old bankruptcy from a few years ago, these places may still be willing to give you a loan.
What they like to see is a checking account in good standing and proof of some kind of income, usually at least $1,200 a month. Search for online installment loans for people with bad credit, then look over their terms to see what loans you might qualify for.
If you have a credit score in the 600s or above, at least $1,800 a month income, and no outstanding collections on your credit score, you may be able to get an installment loan for 10% to 25% or less a year--about what a lot of credit cards charge. The lender has to disclose the interest rate, thanks to the Truth in Lending Act, including the finance charge and total payments.
If your credit score is lower than that, you have a few hundred dollars in collections, a three-year-old bankruptcy, that kind of thing, you may have to settle for a higher interest rate, over 25%, maybe a lot over 25%. I said it wouldn't necessarily be cheap! But at least it's possible. Installment loan websites will usually tell you what minimum things you need, for different kinds of loans.
If you want to see what various payments and costs would be for different interest rates, loan amounts and lengths of time, use this simple little installment loan calculator before you go looking.
If you have bad credit, any kind of loan is going to be expensive. Online installment loans have the advantage that you don't need to shop around to different banks in person, you don't need to get rejected face-to-face, and they're fast. You can apply online, fax any documents that need your signature, and get the money deposited electronically in your account within a few hours or by the next day. If you don't have a fax machine, don't worry. There are ways that you can fax from your computer for free.
You'll generally run across two kinds of installment loan lenders online. One are the actual lenders, who make the loans. The other are companies which just take applications and forward them to the actual lenders who offer loans in your area or loans which fit your credit history and needs. If you're only interested in dealing with the lenders themselves, try adding "direct lenders" to your search.
If you think your credit is good enough for a local bank or credit union to give you a loan, try there first, because the interest rate will probably be lower. Check out the reputation of any online lender that you're thinking of doing business with, by searching for their name and "scam" or "ripoff" or something similar, to see what kind of things consumers have been complaining about, or check their reputation with the Better Business Bureau. Use all the consumer resources available to help.
If you think you'll be able to pay back an installment loan early, ask if there's any penalty for early repayment. If there isn't, you can save a lot of interest cost that way, and of course get rid of the debt sooner too.
If you can get the interest rate low enough, installment loans are fairly reasonable, compared to payday loans. A payday loan that costs $25 per $100 borrowed means you're paying 25% to borrow the money for two to four weeks, but you might be able to get an installment loan that costs $25 per $100 for a whole year (25% annual percentage rate).
Here's a joke somebody sent me a couple days ago.
A well-dressed businessman goes into a bank in New York City and asks for a loan. He says he's leaving for Europe for two weeks and needs to borrow $5,000.
The loan offers tells him that the bank will need some security to guarantee the loan, so the businessman hands over the keys to his Mercedes that's parked in front of the bank. When all the paperwork is done, the loan officer hands over the $5,000 and an employee drives the Mercedes into the bank's parking garage to keep it there.
Two weeks later, the businessman comes back from his vacation and pays off the $5,000 loan plus $19.23 in interest. (That's a 10% annual percentage rate, if you're interested.)
While he collects the money, the loan officer says, "We're glad to give you the loan, but we're curious. While you were gone, we found out that you're a multi-millionaire. Why did you ask for a $5,000 loan?"
The businessman answered, "Where else in New York City can you park a car for two weeks for less than twenty bucks?"
11:28 p.m. April 21
7:09 a.m. April 22
That's an old one.
9:44 a..m. April 22
Aw, come on. It's still a good one. How come nobody told it to me before?
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