When life throws an unexpected emergency your way, getting an installment loan might be your only option. These are loans that you pay back over time in set payments.
Installment loans have lower interest rates than payday loans and you don’t have to pay everything back at once. This makes these loans a desirable option for those that either face an emergency or are looking to build their credit.
There are some things that you need to know before getting one of these loans, however. Read on to learn ten things you should know before accepting the loan.
1. Rates Vary Based On Your Credit Score
Installment loans aren’t as difficult to get as credit cards, but they still check your credit. When a company loans you money, they assume risk: that is, they count on you paying them back, and if you don’t, they take the loss.
To help them gauge if you’re trustworthy, they run your credit. There are many bad credit installment loans online available online, but they charge more interest to ensure they get their money back.
The good news is that your payments are typically due once a month, and you’ll know what they are before you agree to the loan.
2. Know Your Budget Before Accepting A Loan
Before applying for a loan, work out a detailed budget of your monthly expenses. Include all your expenses and make sure that you can afford the payments before agreeing to terms.
The last thing you want to happen is to get stuck in a cycle where you take out one loan to pay for another one. You also don’t want to miss payments, as many loans raise their interest rates if you are late paying your bill.
Remember, a loan should help you out of a financial jam, not put you into one.
3. Find Out If The Loan Company Reports To Credit Agencies
Installment loans that check your credit tend to report to credit agencies, but others don’t. This is important to know.
If they don’t report to one of the agencies, paying back your loan on time won’t have an impact on your credit. If your goal is building credit (and that should always be your goal), only use companies that report to these bureaus.
There are other companies that don’t report your payments to the bureaus, but they will report missed payments. If you think that you don’t have to pay back a loan because they aren’t reporting, think again.
4. You’ll Need A Bank Account For Online Loans
Unlike a local bank, you won’t get a paper check from a website. To receive your money, you’ll need a bank account for the company to deposit your funds.
This is good in that you’ll receive your money faster this way. Often, your money goes into your bank account in as little as 24 hours. This method does present problems for those without bank accounts though. If you don’t have a bank account, see if you can open one up before applying for a loan.
5. Know The Requirements For Getting The Loan
There are different requirements for getting an installment loan based on where you live and the company you go through.
No matter you go, you have to be 18 years old to get a loan. A loan is a legal contract between you and a company. To sign a contract, you have to be of legal age.
At Bonsai Financial, we have the following requirements:
- Borrowers must be between 18 and 65 years old
- Must have a source of income, be it a job or regular support payments from another source.
- You must have an active cell phone that receives phone calls and text messages.
- You must have an active debit or credit card. This card is a fallback solution in the case of non-payment of your loan.
- You need a bank account to pay your loan and receive your funds.
6. It’s Easier To Use An Online Loan Brokerage Site
If you think it’s easy to find a loan, think again.
First, you’ll have to do an online search for loan companies that meet your situation. You’ll then have to determine whether these companies are legitimate. There are many websites that will steal your personal information without giving you what they’ve promised.
Next, you have to fill out applications without any indication of your chances for approval. Keep in mind that many of these applications place hard checks on your credit report, lowering your credit score.
With Bonsai Financial, all you’ll have to do is fill out our online form. We’ll then match you with companies that are best suited to meet your needs. These companies are reputable lenders that have been in business for years.
You’ll know that you have a high chance at approval because we’ve done the legwork for you. It’s the easiest way to get an online installment loan.
7. There Are Many Types Of Installment Loans
There are different types of installment loans, however. There’s a good chance that you already have one or more without realizing it!
College loans, car payments, and home payments are types of installment loans. Most people have at least one type of loan. The good news is that having an open line of credit helps your credit score. The bad news, of course, is that failure to pay results in a low score and makes it difficult to get loans in the future.
8. They Can Help You Consolidate Your Other Loans
If you are one of the millions of Americans that have multiple loans, you can combine them into one payment.
By taking out a large installment loan and using it to pay off your other bills, you could save money long-term. How?
First, you’ll need to find an installment loan with a low interest rate. If the rate is lower than your other loans, your monthly payments will decrease. The amount of money you pay over the life of the loan decreases as well.
Your credit score also improves because all lenders see is that you had loans that were paid in full. Meanwhile, you’ll only have to worry about one bill, so you don’t have to send out multiple payments every month.
Depending on how much you need to consolidate, it might be hard to find a loan for that amount. You can, however, merge a few of your loans into one, pay those off, and then seek a higher amount for the rest of them.
Two bills are better than five, right?
9. You Can Get Pre-Approved In Minutes
Most online lenders know that people don’t want to wait forever to find out if they can get the money they need. There are too many options online for lenders to take their time getting you pre-approved.
Through online lending brokers, consumers can fill out a form and have options in front of them within minutes. Lenders know that if they pre-approve you based on the information provided, you’re likely to follow the process through.
A pre-approval is different from an approval, however. Getting pre-approved means that you’ve met their basic requirements. Most of the time, you’ll still have to undergo a credit check before the company approves you for a loan.
Getting pre-approved saves you time and effort though. You won’t have to guess whether you meet the basic requirements. You also won’t have a bunch of hard checks against your credit.
Companies like Bonsai Financial act as an intermediary between you and loan companies. They connect you with lenders that loan to people in situations similar to you.
You’ll know where to apply and can find out within minutes if you can get the money you need to be deposited into your bank account.
Get The Money You Need Today
If you need an installment loan to pay down debt, take care of an emergency, or go on that family vacation you’ve been planning, don’t wait! Get started today with Bonsai Financial.
We’ll connect you with lenders and work to find you the perfect loan for your needs. The best part about our service is that it’s free for you! You won’t ever pay anything to Bonsai Financial.
Just fill out our form and we’ll get to work connecting you with lenders. Since we know who they tend to approve, you’ll only get the options that provide you with the best chance at approval.
Check out our blog for more information on loans, credit cards, and more. We’re here to help you secure your financial future!