Personal Installment Loans from Online Lenders
An installment loan is a financial product that is paid back through fixed payments that are due each month. A personal installment loan can provide discretionary funding that borrowers can use for a variety of reasons. The loan is based on the borrower’s signature if it’s an unsecured loan or on the collateral if it’s a secured loan. Thousands of banks, credit unions, and private lenders offer personal loans online that include short term personal loans, long-term loans, and other similar options. Consumers use personal installment loans to cover medical expenses, weddings, home improvements, car repairs, family vacations, auto loans, and many other purposes.
The benefits of quick personal loans include a faster approval process and an easier application process. Lenders can obtain many loan verifications electronically, which simplifies things for applicants. Borrowers just need to provide proof of age, identity, address, Social Security registration, and employment details (or an alternative income source). An applicant may not need a bank account to qualify.
The application only takes a few minutes in most cases, and the loan can be approved and disbursed as soon as the next business day.
What is a Personal Installment Loan?
A personal loan paid back over time is called an installment loan, and unsecured personal installment loans now rank among the most popular consumer loans. These loans include personal loans for an emergency, student loans, auto loans, boat loans, motorcycle loans, vacation loans, and credit-builder loans. Basically, these are all personal loans, but they’re marketed for specific purposes to attract consumers who are considering those particular products or services.
Most installment loans have fixed payments for both secured and unsecured loans. That means that people who get wedding personal loans may receive a loan offer with fixed payments that won’t change after the honeymoon. Installment loans tend to be stable over time. Defaulting on an installment loan could result in a big drop in credit score.
Personal Installment Loan Lenders
Borrowers can find installment personal loans from lending networks, peer-to-peer lenders, community lenders, and direct lenders. Some banks and credit unions offer personal loans, but borrowers need very good or excellent credit for approval. Those with good, fair, or poor credit can sometimes find a lender that will approve a quick loan, but those with lower scores will likely pay higher rates. Those with high credit scores can sometimes receive loan deals that compare favorably with bank interest rates, and the speed and convenience make applying for a loan from a direct lender simple and stress-free.
In some cases, the benefits of getting a personal installment loan from a private online lender include:
- Faster processing of loan applications
- Wider range of loan types and interest rates
- No application or third-party fees
- Simplified application process
- No collateral required
- Competitive interest rates
- Flexibility to consider unusual financial situations, such as self-employment, no bank account, or no income
- No hidden fees
Benefits vary by lender.
Personal Installment Loan Rates
The average rate of personal installment loans varies because states have the power to regulate loans. Nationwide, installment loans range from 5.95 percent to 35.99 percent annual interest rates. A higher interest rate usually means higher monthly payments. All loans depend on three major factors: interest rate, repayment period, and monthly payment. Borrowers need to know only two of those factors to calculate the third. Personal loan apps can make the calculations, which can get complex when it’s necessary to calculate compound interest.
Personal Installment Loans for a Poor Credit
The first step for borrowers with poor credit is to check their credit scores from the three major credit bureaus: TransUnion, Equifax, and Experian. It’s highly possible that inaccuracies exist, such as reports that should have expired or false reports caused by identity theft. There could also be clerical errors and misunderstandings in the credit reports.
Even if a borrower has a few problems or a low score, he or she can sometimes find an installment loan by paying a higher rate of interest.
Creating a Budget to Manage an Installment Loan
The financial experts tend to agree on one issue related to lending: Borrowers should create a budget to manage their installment loans. Some loans have longer repayment periods, and even minor changes in income and expenses can render installment loan payments unaffordable over time. Budgeting is the process of managing money by listing all income and expenses and allocating enough money to cover each area. Unexpected expenses are generally covered by a savings account dedicated to that purpose.
It is recommended that borrowers remember to record all expenses, such as taxes, and prorate the annual costs over the number of pay periods in a year. It’s also important to include paycheck withholding for insurance, savings plans, IRAs, etc. Budget-makers should keep track of every expense – including money spent on coffee and snacks and used as pocket money by each member of the family.
Creating and following a budget is the best way for borrowers to improve their credit scores. The budgeting process forces people to keep track of when the bills are due so that they don’t miss payments. Creating an emergency savings fund helps families deal with unexpected expenses. It recommends the following budgeting practices:
- Routinely overestimate expenses to be on the safe side.
- Involve all family members in the budget process.
- Build an emergency fund to pay unexpected expenses.
- Underestimate income by minimizing overtime, anticipated pay raises, etc.
- Periodically update the budget based on rising prices, new expenses, changes to income, etc.
Personal Loans for the Widest Range of Consumers
Direct lenders may offer more options for borrowers than traditional lenders. These sometimes include no bank account personal loans and loans for the self-employed. Many people receive entitlements, such as Social Security, disability, welfare, VA benefits, and other automated payments. Some people receive alimony, child support, structured disbursements from trust funds, royalties for intellectual property, and unpredictable self-employment income. Many people don’t need to maintain a bank account because of debit cards and advanced electronic-transfer technology.
Some consumers – especially those with bad credit – are denied a bank savings or checking account. Some people don’t trust banks after the 2008 financial crisis, and others don’t want to pay the required fees or maintain the required minimum balance. Fortunately, online lenders are willing to approve loans for those without a bank account.
The same applies to people who are self-employed. These jobs are often conducted from home and involve occasional consultations or performing services as an independent contractor. Self-employment also includes part-time work in a variety of fields. If a person can prove that he or she will receive a certain amount of money over time, he or she might be approved for an installment loan. Verifications include bank records, tax files, records of seasonal increases in business, and contractual agreements for certain payments.
At this point, it bears mentioning that many lenders have advertised no credit check personal loans, but these lenders always end up running a credit check anyway. Those with bad credit may still be able to find a loan, but it is important to know that most lending institutions will check an applicant’s credit score even if they suggest otherwise.
What Are the Best Practices for Borrowing Online
Borrowers can sometimes increase the likelihood of loan approval by gathering all the necessary information and income verifications before applying. Usually, that just means supplying basic information about identity, employer, address, income, and indebtedness. Some lenders will want to know how many dependents the borrower has and further information about living expenses.
Borrowers with special circumstances, such as no bank account, no regular income, or bad credit might need to gather alternative information or apply for a different financial product. Before receiving a loan, prepare a budget, check the policies of different lenders, compare interest rates, and choose a loan with affordable payments. That’s the best recipe for success in using a personal installment loan.
How to Check if a Loan Company is Legitimate
Not all loan companies are reputable. There are many that operate in bad faith. Before working with a lender, it is important to check the following:
- Make sure they are licensed to make loans – some lenders do not want to get licensed because they want to operate outside of the law. This can be because they want to set their APR higher than what local laws allow.
- Never sign a loan agreement if it does not include all the terms and conditions. By law, the lender must tell you how much the loan will cost.
- Be wary of any lender that promises no credit check or instant funding. Most legitimate lenders will check your funding. Also, lenders require time to process your application and send your funds. If a lender makes promises they cannot fulfill, then you have to wonder what else they might be lying about.
Scammers understand the urgency often involved in requesting funding. They think you will not double-check to make sure they are legitimate. Besides the three tips listed above, there are several more ways to avoid bad loan websites.
Look for the SSL
About two years ago, Google announced that it would give search result preference to sites that use an SSL. They made the change to “keep everyone safe on the web.” So how does an SSL make a website safer? And how can you tell if a website has one?
SSL stands for Secure Sockets Layer. It basically makes it so the connection between a site’s web server and your browser is encrypted, so that it’s harder for hackers to view the data that’s being transmitted between those two points. An SSL certificate shows that a site has an up-to-date SSL in place.
There are a couple ways to tell if a site has an SSL. First, your browser will show a lock next to the URL. Here’s what our URL looks like through Chrome:
In that picture above you’ll also see that the URL begins with “https.” That “s” at the end will only be there if the site has an SSL. You can click on the lock to learn more about the SSL. This lets you see the company that issued the certificate and when the certificate will expire.
Please Note: Just because a site has an SSL doesn’t mean it’s safe. It just means that there’s less of a chance an eavesdropper will snag your information. If the site itself is run by some rotten eggs, then you could still be in danger.
Investigate Security Seals
Both McAfee and Norton offer security seals to websites. We use McAfee. They scan our site to make sure there’s no malware, malicious links, or phishing shenanigans. You can verify their search by clicking on the McAfee symbol at the bottom right of any page on our site.
A security seal combined with an SSL can make a website a lot more legitimate. But there’s more you should look for, too.
Double-Check Google for Bad Reviews
If the site passes all the previous tests, then chances are it’s been around for a while. That means it might have an online reputation. Head over to Google and search the domain name with quotation marks around it. That’ll show you all the places the site name has showed up. The first few entries will likely be the site itself, but you should find some other results as well. Hopefully a few of these will be reviews.
Be wary if you see a lot of search results with negative reviews or warnings about the site. And remember, just because you don’t see any negative reviews, that doesn’t mean the site is perfect. It might be newer than you think.
See How Long the Site Has Been Around
You can use a service like whois.domaintools.com to see when a site was originally created. You may have to do a little bit of digging to see how long the current owner has maintained the site, but a cursory glance at the results will tell you if the site is suspiciously young.
Check What Other Sites are on the Server
Majestic offers a reverse IP checker that lets you see the other sites that are on the same IP address. Check and make sure those sites are reputable, too. Heads up: if you check too many sites with this tool in the same day, the site will ask you sign up for a subscription.
We understand that your need for a personal loan may be an urgent one. Still, we recommend taking the time to make sure you are dealing with a reputable website. This is to protect yourself from entering your personal information into a bad site.
Following these tips should give you an idea as to whether you’re on a legitimate online installment loans site. But you should also stay on guard in other ways. Keep an eye on your bank account and look for any suspicious activity. Cyber thieves are getting better and better at what they do. It’s up to you to stay one step ahead of them.