Getting an Installment Loan is Not a Problem for People with Bad Credit
Wednesday, December 5, 2018, 6:00 AM | Leave Comment
For catering to a wide range of customers with varied needs, many high-quality lenders offer loans that are easy to pay back in installments on a fixed date every month.
Typically, these loans named as installment loans are highly attractive because of the ease of paying a fixed amount of money every month that helps better balancing of monthly budgets.
Since lenders are keen to bank on their reputation for spreading and growing their business, they charge affordable interest and follow fair business practices, unlike some short-term lenders who twist the customers’ arm for unfair gains.
Usually, the interest rate remains fixed that leads to fixed monthly payments comprising of the principal amount and interest. This type of loans can acquire many different names, but the most common one is personal loans that have become very popular nowadays.
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Secured or unsecured loans
Installments loans can be unsecured loans when the borrower need not provide any collateral security as a guarantee for repayment, or it might be secured loans granted against some movable or immovable assets like a house, a car or insurance policy as security.
Borrowers most prefer unsecured loans because it does not expose your assets to any risk which can happen for defaulting on payment of secured loans.
While lenders are more comfortable in lending against security, the opposite is true for borrowers who would always prefer unsecured loans. Perhaps this is the reason why most personal loans or installment loans are unsecured.
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Covering for the risks of unsecured loans
Personal loans come with a high interest rate that ranges between 6% to 36% depending on the amount of loan, repayment tenure and the financial credibility of borrowers.
Lenders charge high interest to cover the risks of lending without security and borrowers are happy to bear it because it is a better option than exposing their assets to risk by placing it as security.
Defaulting on payment for installment loans might save your assets, but it damages your financial credibility by lowering the credit score that affects your borrowing capabilities in future.
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Credit scores do not hinder borrowing
The biggest attraction of installment loans is that it does not debar any person from borrowing because of poor credit scores.
Companies that offer personal loans do consider credit scores to evaluate the reliability of borrowers, but people with poor credit scores are eligible for bad credit installment loans.
As explained earlier, the interest on such loan is higher, but still, it is attractive because borrowers who badly need money get it just at the right time. Getting money is so vital that borrowers are ready to pay high interest.
The biggest concern of borrowers when seeking loans is the fear of refusal to grant loan which is almost non-existent for personal loans. Moreover, the speedy disbursement of loans that happen within 24 hours of applying for it and within a few hours in case of emergencies is what delights borrowers.
Installment loans are a great leveler in that it does not discriminate borrowers based on credit scores.
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