Installment loans allow you to spread repayment over 1 to 60 months and provide a more flexible alternative to payday loans. See if you qualify for $1,000, $2,000 or $5,000 using our online application form from Capital Bean. We have a number of options available for people with bad credit scores too.
An installment loan is a type of loan you pay back in set monthly amounts, or “installments”. Many people use them, even if they don’t have the best credit. Even with a low credit score, you can still get installment loans.
These loans are pretty popular. For example, about 27.5% of American adults had at least one installment loan during the third part of 2020, as stated by the Federal Reserve Bank of New York.¹ Instead of paying everything back immediately, you make planned payments over time. There are also many installment loans available online.
There are various types of online installment loans, each with different interest rates and conditions. These loans can be for businesses or for personal use. But in this discussion, we’re focusing on personal installment loans. So, if you’re thinking about getting a car loan, house loan, home equity loan, or online loan, it’s good to understand how these loans work.
There are several kinds of installment loans, including:
Each loan has a different use, and the rules, conditions, and needs for getting one can change. For instance, people with good credit might get approved more easily, borrow more money, or pay less interest than those with not-so-good credit.
A personal loan where you get the money all at once and then pay it back in set monthly amounts is called an installment loan. This is true for both online and face-to-face loans.
Some installment loans are made for people with not-so-good credit. These are sometimes called “bad credit loans.” They might be a better choice than payday or title loans. You can find these loans both on the internet and in stores. Always carefully check out an online loan just as you would with one you get in person.
When searching for the right online installment loan, it’s crucial to check out several lenders to get the best deal, especially if your credit isn’t perfect. Many places offer installment loans, including banks, credit unions, online-only lenders, and some online peer-to-peer platforms.
When looking at different online lenders, think about the Annual Percentage Rate (APR), how long the loan lasts, how you pay it back, and how helpful they are to their customers. Finding a lender with a fair interest rate and terms that work for you is good. Also, see if they let you set up automatic payments, so you don’t forget and end up with extra fees. And remember to ask about any costs tied to how you pay, whether that’s online with a card or bank account, in cash, or by check.
By carefully checking out different lenders and finding the right loan for you, you can get the money you need and pay it back without too much stress.
| Loan Category | Interest Rate Type | Duration of Repayment | Borrowing Range | Security Needed | Common Uses |
|---|---|---|---|---|---|
| General Installment Loan | Fixed | Depends on terms | $100 – $100,000+ | Possible | Multiple needs |
| Unsecured Loan | Fixed or Changes | 1 – 7 years | $1,000 – $50,000+ | None | Consolidating debt, general expenses |
| Car Financing | Fixed or Changes | 1 – 7 years | $5,000 – $100,000+ | Car | Buying a car |
| Home Loan | Fixed or Changes | 15 – 30 years | $50,000 – $1M+ | House | Buying a house |
| Short-Term Cash Loan | Very high, fixed | 2 – 4 weeks | $100 – $1,000 | None | Quick cash needs |
Consider credit cards or lines of credit as potential substitutes for personal installment loans.
Whether you’re opting for a loan or any other credit line, always inspect the terms to ensure you’re receiving a favorable deal.
Borrowing from trusted friends or family can sometimes offer more lenient terms and flexibility.
Home equity loans or credit lines allow you to borrow against the equity in your home, often at more favorable rates.
Investigate government-supported loan programs tailored to particular requirements, like furthering education or renovating homes.
| Loan Aspects | Online Installment Loans | Payday Loans |
|---|---|---|
| Repayment | ✓ Regular, fixed scheduled payments | X Single payment due, typically by next payday |
| Interest Rates | ✓ Generally have stable rates | X Tend to have elevated rates and additional charges |
| Repayment Terms | ✓ Extended terms, from months to years with fixed payments | X Primarily for short-term cash deficits |
| Loan Amounts | ✓ Often allow for larger borrowing amounts | X Usually limited to smaller sums |
| Purpose | ✓ Suitable for various expenditures or debt amalgamation | X Meant for urgent financial requirements |
| Approval Criteria | ✓ Approvals may accommodate subpar credit based on repayment ability | X Often accessible to those with bad credit |
| Financial Risk | ✓ Possible charges for early payback or missed payments; rates might increase for those with bad credit | X Risk of spiraling into debt; high overall financial peril |
| Credit Building | ✓ Can enhance credit if managed responsibly | X Usually, doesn't contribute to credit records |
| Competitive Interest Rates | ✓ More favorable compared to other short-term options | X Generally high rates compared to other credit products |
| Risk of Repossession | ✓ Possible for secured loans | X Collateral not typically required |
| Financial Commitment | ✓ Commitment spans a longer duration | X Primarily a short-term financial obligation |
Installment loans refer to any loan which is repaid in regular installments. This can include personal, auto, mortgage, and student, commercial, and commercial loans.
An installment loan refers to any personal or commercial loan repaid in regularly scheduled payments or installments. Each repayment will comprise a proportion of the principal amount borrowed and payment of interest on the debt.
The amount paid back will depend on the total amount of the loan, the interest rate, and the duration of the loan term. Typically, the payment will be the same amount each month.
Generally speaking, any type of loan that is paid off in regular monthly payments can be considered to be an installment loan. This includes mortgage loans, personal loans, auto loans and student loans. The majority of installment loans tend to be fixed-rate loans meaning that the interest rate is the same throughout the duration of the loan term and borrowers pay back equal amounts in each installment. Mortgage loans are the only exception as they are sometimes a variable-rate loan where the interest rate fluctuates during the loan term.
Installment loans can be secured or unsecured. Secured means the borrower has to put up collateral, whereas unsecured loans are non-collateralized. For example, mortgage loans are collateralized with the property being purchased acting as the collateral. Similarly, for auto loans, the purchased car will act as collateral.
However, some installment loans can be given without the need for collateral. Personal loans that are not collateralized are usually assessed by looking at the borrower’s creditworthiness and ability to repay the loan. For these types of loans, a lender will typically look at the borrower’s credit score and credit history, their income and their assets.
As a general rule, the interest rates for unsecured loans tend to be higher because the loan extension is riskier for the loan provider.
To apply for an installment loan, a borrower must fill out an application with the lender. Usually, at this stage they will need to specify what the loan is for. Lenders will discuss different available options with the borrower regarding the duration of the loan, the deposit value, the payment schedule and how much each payment will be. Additionally, the lender will typically review the borrower’s creditworthiness to determine the loan terms and what amount of credit they are willing to offer.
The loan term is finished when the borrower has made all the required payments. Sometimes, borrowers can repay the loan before the end of the loan term and save money on interest charges.
There are many advantages to taking out an installment loan. Borrowers who have installment loans can benefit from their flexibility; installment loans can be tailored to suit the borrower’s specific needs regarding duration of the loan term and the loan amount to ensure that the borrower is able to meet repayments.
Additionally, Installment loans offer a far lower interest rate than some other forms of credit such as credit cards.
Paying off the same value each month means that installment loans are easy to incorporate into budgets and allow for long-term financial planning. Also, they enable borrowers to finance big purchases without making a huge layout of cash.
However, the loan fees associated with installment loans can sometimes be high. If taking out an installment loan on a long-term basis, it is possible that the fixed-interest loan agreed at the start of the loan term may be higher than the market rate at a later stage.
Even though affordability of the loan is assessed at the start, if any payments are not met this could cause long-term damage to the borrower’s credit rating reducing their borrowing power for the future. Because the borrower is locked into this financial obligation, if circumstances change they also risk default and possible repossession of any collateral.
Applying for installment loans will typically require a credit check. Although this may incur a small reduction in your credit score during the credit check, if you are able to make consistent timely payments, installment loans can hugely strengthen your credit.
Payment history represents a large proportion of your credit score meaning that if you are able to regularly repay your installment loans on the specified date, this will benefit your credit rating.
However, if you are unable to meet your monthly repayments for any reason, the consequences can be serious. Payments made more than 30 days late have the potential to reduce your credit score by 50 to 100 points. Usually, lenders will have the option to set up automatic payments; this can save the hassle of remembering when to pay.
It is still possible to take out an installment loan with bad credit (below 630) in some cases. There are particular lenders who specialise in borrowers with bad credit. These lenders will have different lending criteria and will check other variables instead of credit rating. Typically, bad credit lenders may look at factors such as bank account transactions, employment history and existing debts.
Generally speaking, banks will not be able to extend personal installment loans for individuals with bad credit. However, credit unions and online lenders will have lots of options available for bad-credit borrowers.
Bad-credit borrowers could be at risk of predatory lending when looking to take out an installment loan. Some lenders take advantage of these borrower profiles and charge extremely high interest rates. Lenders need to disclose the loans APR up front, some of which are 100% or higher; personal finance experts typically recommend that any APR higher than 36% is unaffordable.
If a lender offers no-credit-check loans and does not assess your ability to repay the loan, although this may benefit borrowers who are finding it difficult to secure a loan, it could cause them debt in the future and they are at risk of predatory lending.
If for whatever reason you cannot make a loan installment one month you might be charged a penalty or late fee for this. There’s also the danger that if you miss payments your credit score could be damaged. This is why it’s always important to make sure you can afford the repayments on any loan that you take out. It’s also important to let the lender know if you think you’re going to miss a repayment.
If you let the lender know that you might miss a repayment they might be able to work something out with you.
Typically, a solid financial history, a good credit score, and a bank account in good condition are the prerequisites for eligibility. For certain personal loans, lenders might mandate collateral. Such a personal loan is termed a secured loan. Individuals with a lower credit score might need to explore multiple options before securing loan approval.
Rates are typically influenced by elements such as the borrower’s credit background, the loan sum, and the repayment duration. Generally, those with stellar credit can secure lower interest rates on personal loans, whereas individuals with compromised credit might be subject to higher rates.
Certain installment loans offering monthly repayments permit borrowers to make extra payments or settle the loan ahead of schedule without incurring penalties. However, some might impose charges for early repayment. It’s crucial to understand the prepayment conditions of your individual loan.
Failure to meet loan obligations could lead to legal proceedings, accrual of extra fees and interest, and a drop in your credit rating. Neglecting payments or defaulting on your loan may tarnish your credit record for as long as seven years. Hence, if you encounter financial challenges, it’s crucial to discuss with your lender to consider possible remedies or alternate payment plans.
Whether acquired online or in-person, installment loans function similarly. You’ll have to go through the application process, gain approval, receive the funds, and adhere to the repayment plan. The primary distinction is the convenience that online installment loans offer. If you’re leaning towards online options, ensure you exercise the same due diligence as you would with a traditional loan.
Lenders generally ask for specific documents to verify a borrower’s eligibility. Commonly requested documents include evidence of earnings, proof of identity, a recent address verification, bank account summaries, and details about one’s employment. However, the exact requirements can differ from one lender to another.
Yes, if you have a bad credit score you might be asked for more documents and evidence of monthly or weekly earnings.
It depends who you borrow money from but in most cases the lender will need a bank account to send the money to.
Most lenders will let you send in your documents through email, fax or even the mail.
The time it takes to get approved can differ based on the lender and the applicant’s specific situation, but a decision is usually reached within several business days.
Yes – if more documents are required, the lender will typically reach out to you via phone, email, or their online portal.
To confirm your earnings, you might be asked to submit extra papers like tax declarations or profit and loss accounts.
Most lenders are okay with online copies of papers, but always ask to make sure.
Yes, trustworthy lenders follow privacy rules and work hard to keep your data safe.
Use our 100% free online form to apply in less than 5 minutes.
You will receive an instant decision on screen from one of our lending partners who will offer the best rates.
You have already provided your bank account details so within 1 hour, the same day or the next business day you will get your funds.
Instant installment loans can be beneficial for managing finances, but it’s crucial to stay alert to possible scams or shady lending practices. Some dishonest lenders might exploit borrowers, especially those in tight spots, by pressuring them into quick decisions, demanding unusually high fees, or not being transparent about loan conditions. These types of lenders typically target individuals with poor credit because they know they might be desperate for loan options.
Below are some red flags and guidance to help you steer clear of these potentially harmful practices when considering installment loans:
Always look into the lender first to stay safe from tricks or bad deals. Make sure you understand everything before saying yes to a loan. If you have bad credit, take extra care. A loan should make things easier for you, not harder.
If you’re having a hard time with your loans, there are some groups that can help you get on track. These groups can give you advice, teach you about money, or even help you make a plan to pay off your debts. If you have bad credit, these places can be really helpful. Here are some you can reach out to:
As a responsible lender, we’d like to offer advice if you consider getting a personal or online loan. It’s super important to look at your money situation and what you really need before saying yes to any loan, including installment or payday loans. Always ensure you know all the costs and rules of the loan, whether you’re doing it online or face-to-face.
Installment loans can be a smart choice if you’re looking for online loans with monthly payments. These loans have a clear payment schedule and the interest rates don’t change. They can help you plan for big costs and can make it simpler to bring all your debts together. But, it’s really important to pick a good lender. You want one that offers good rates, payment choices, and clear information about all the loan’s details.
Always remember: borrow wisely and pay on time. Doing these things can help you take control of your money. Plus, it can make it easier for you to get loans with good terms later on.
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Capital Bean is a place you can trust for good money advice. We’ve helped many people with their money needs in the past. At Capital Bean, our main goal is to help you understand and grow your money. Whether you’re curious about how to save, use credit cards, or get personal loans, we’re here to guide you.
Capital Bean is a place you can trust for good money advice. We’ve helped many people with their money needs in the past. At Capital Bean, our main goal is to help you understand and grow your money. Whether you’re curious about how to save, use credit cards, or get personal loans, we’re here to guide you.
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* Not every loan application gets approved. The decision and loan conditions depend on your credit check and local laws. If you get approval before 10:30 a.m. CT from Monday to Friday, you’ll usually get the funds that same day. If it’s after this time, expect the funds the following business day. If we need more information to check your application, and it’s approved afterward, the funds will be given the next business day after we complete the checks.
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According to the MLA, a “servicemember” usually refers to someone who is a regular or reserve member of the Army, Navy, Marine Corps, Air Force, or Coast Guard. They should be on active duty under an order that isn’t just for a short span of less than 30 days. On the other hand, a “dependent” typically means a servicemember’s spouse, a child below 18 years old, or any person who received over half of their financial support from the servicemember in the recent 180 days.
To see if you fall under the MLA, you can make a one-time request on the official MLA website.
Loan Disumbersement – If your application is approved before 10:30 a.m. CT from Monday to Friday, you’ll usually receive your funds on that day. If it’s approved after that time, expect your funds the following work day. If we need more time to double-check your application details and it’s eventually approved, you’ll receive your loan the business day after we finish the additional checks.
High-Cost Disclosure: Loans from Capital Bean come with a high APR, making them unsuitable for long-term financial plans. Most of the time, these loans also come with an origination fee that you won’t get back if you decide to pay off the loan early. Ensure the loan you pick fits your financial needs and repayment capability. Think about the loan’s amount, duration, and the charges involved. If you opt for a loan with high interest, you can lower the overall charges by paying more than just the minimum due. If you pay late, it will cost you more, and you might get a late fee. If you’re facing credit issues, consider seeking advice on managing your credit. For useful tools and info on understanding finances, trends in credit scores, and financial terms, check the Resources section on our website at www.capitalbean.com
