You’ve surely heard of loans. There’s a whole lot of them out there, and you’ve probably heard of at least the most common ones. There are mortgage loans for when you’re ready to become a homeowner. There are auto loans when you’re trying to get a car. And if you’ve gone to college, you’re probably familiar with student loans. And perhaps most common of all, you’ve used a credit card.
All of these are in some way or another one of two kinds of loans: Revolving Lines of Credit and Installment Loans. Each of them has a different way of paying them off, a different way in which you’re given your money, and the different ways in which they may be acquired. Today, we’re going to learn a little more about what Installment Loans are about.
What are Installment Loans?
Installment loans are loans that you agree to pay a fixed amount every month and over a certain length of time. This is affected by the total amount that you’re borrowing, the interest rate at which you’re paying, and finally how many months might you be paying off this loan.
Some examples of installment loans are car loans or mortgage loans for your home. In both of these, you may be familiar with how you are expected to pay a certain fixed amount every month.
Getting an Installment Loan:
Getting an installment loan for anything is a process. First, you will need to find out if you can qualify for a loan. When approaching a lender, they will usually assess things such as your annual income, your credit score, and any debt-to-income ratio you may have a current debt load.
Your credit score is very important in cases like this. It shows lenders how reliable you are in making your payments. And if you know you have a bad credit score, it is possible to try finding installment loans online that can either help you find installment loans despite your bad credit and can even expedite the process of getting your money to some degree.
But in most traditional cases, you will be speaking to a lender, face to face. This will usually happen at your local bank or credit union, mainly because you may have already some sort of relationship with them and they have informed you of their loans and credit cards. That’s why if you have checking or savings account with a bank, you may occasionally get offers in the mail to try applying for their credit cards, or to look to them for when you’re looking for a mortgage.
How to Improve Your Chances for Installment Loan Approval:
Now that you know what a lender will be looking at, there are ways to improve the way you look before you sit down with a lender.
Your credit score is one of the most vital parts of whether or not a lender thinks you’re trustworthy enough for their loan services. It’s essentially a snapshot of how well you’ve handled being trusted with payments in the past. One of the best ways to shape up your credit score as best as possible is to take advantage of any free credit reports you can get. The three major credit agencies called Equifax, Experian, and TransUnion all allow one free credit report request per year. Use these to see if there are any errors with your credit history and get those errors fixed as soon as possible. The last thing you want is to let an error make your score look worse than it is. Every point counts!
Your annual income is not something you can really choose without getting a promotion or a better job, but it is still important to know what your annual income is going to be when your lender asks because that will help determine the lender’s confidence on whether or not you will be making enough money to even pay off the loan payments on time and within reason. So, if you haven’t been with your job for even a year, or you’re working multiple jobs, be sure to take all of that into account, and try your best to calculate how much you should make from the start to the end of the year. The more accurate of a figure you can provide, the better.
Your debt-to-income ratio is basically a weighing of how much debt you’re currently carrying versus your income. This helps tell the lender how capable you would be at managing a loan from them and whether or not you’d be a high risk or a low risk. You don’t want the ratio to be high. This can be mitigated by trying to take care of any big debts you have. The more you can pay off and get rid of before you see your lender, the better your ratio will look.
Getting Your Installment Loan Online:
There are ways to get a loan quicker as well as even if you’re currently hampered by bad credit. However, it is always good to do your research before choosing an online lender. Every lender has their own fine print and has their own share of costs or penalties. Each lender also has their own conditions for if you default, and much more. It would be wise to bear in mind what each lender expects of you and what could be in store for you if you don’t manage to pay off your loan in a timely manner.
But if you are confident in your ability to pay off an installment loan, getting one online could work for you. Check out their websites, make sure they are licensed by your local state (for example, if you live in Maine, you can’t get loans from lenders that are only licensed in North Carolina). Read up on the lender’s rates and terms. Knowledge is power, and when you’re borrowing money from a lender, you’ll want to be as informed as possible, so you’ll know your every option and what you’ll need to do in any situation.
The key quality of online installment loans is how soon you can get your loan after approval. A lot of traditional banks will usually take a few days to even a week before you get your loans or revolving line of credit. But when you do an online installment loan, after you’ve been approved, it’s possible to get money as soon as the same business day, which can be vital when you need money in a hurry. That’s why it is important to do your research before the need ever arises. Be fully informed so that you know exactly what lender you want to turn to when you find yourself needing to get an installment loan online. Otherwise, if you know you have time, and you have a plan, you could always try the more traditional methods.