Do you have bad credit, yet you find yourself in a situation where you need a loan? Are you unsure if you could even get approved for an installment loan, but you know that payday loans are not your best option?
Believe it or not, there are companies that offer installment loans for bad credit. In fact, some of these lenders are the same ones that offer payday loans. Whether you realize it or not, there are some key differences between the two loan types that you should keep in mind.
Requirements
While the exact requirements for either a payday loan or an installment loan will vary by lender, there are some basic requirements that both will have. Payday loans generally only require an active checking or savings account, proof of income and the age of the borrower be at least 18.
Installment loans will also require these things, but the borrower's credit history can come into play. Thus, installment loans are more difficult to qualify for than payday loans, and may have higher income requirements. Another difference is that the borrower may have the option to secure the loan with a piece of collateral. An example of this would be a title loan.
Repayment Terms
The repayment terms are the largest difference between installment loans and payday loans. In most cases, payday loans will require full repayment on the borrower's next payday. Customers can also choose to pay a fee and extend the loan. Installment loans do not require repayment in full on the next payday, and are instead spread out into equal payments.
This can vary to include payments that are made every time the borrower gets paid to payments that are only paid on a monthly basis. Installment loans may also be refinanced, depending on the terms of the lender.
Loan Amounts
The amount a consumer can borrow is also a key difference between installment loans and payday loans. Payday loans are often limited by the amount of a person's next paycheck or state laws.
Installment loans are available for larger amounts that take into account a borrower's monthly income as well as their credit history. Consumers may also be able to obtain an installment loan based on the value of collateral, which can increase the amount they are eligible to borrow.
Lender Options
In most cases, payday loans are only available from payday loan lenders. However, consumers can get installment loans from a variety of sources including banks, credit unions and finance companies.
Taking out a loan is never a perfect process, and it is generally a difficult decision to make for most consumers. This can be especially true for those on a tight income. If you are confused about your options for installment loans, consider contacting a lender such as Las Vegas Finance in your area.
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