Installment Loans for Bad Credit: Available Options

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Whether you know it or not, credit controls most things for you. Your credit dictates whether or not you can qualify for a loan, mortgage, or a car. It can also impact whether or not you can get insurance and sometimes, even jobs. When you have bad credit, you probably begin to feel like you do not have any options when you need money.  You simply have to have the right information and know where to look. Continue reading to find out more information.

Top Installment Loans For Bad Credit

When you are looking for installment loans for bad credit, there are some lenders that you should consider first. They may be more friendly bad credit personal loan lenders and willing to approve you.

What Are Installment Loans?

An installment loan is the same thing as a personal loan. The two terms are often used interchangeably. You borrow the money from an installment loan is a specific amount of money that you borrow all at once. You make a promise to repay the loan plus interest by making a certain number of payments. These payments are called installments, hence the name of the loan. The interest on the loan can be fixed or variable If it is fixed, then it remains the same for the life of the repayment period. If it is variable, it can change. If the interest rate is fixed, then your payments also remain fixed. If the interest rate is variable, then your monthly installment amount may change.

Installment loans may have fees that come off of the amount of money you receive. There are installment loans for bad credit available to you. Installment loans can be secured or unsecured. Lenders of these types of loans can be traditional lenders such as banks or credit unions. Lenders can also be online lenders.

What Is Bad Credit?

You may be thinking, “I think I have bad credit, but how do I know for sure?” Well, if you think you do, there must be some reason why you think that. Have you been turned down for credit in the past? Has someone told you that you have bad credit? The best way to find out is to pull your credit report. Your credit score is prominently displayed on your credit report.

I am going to spend a few moments talking about credit scores. If you are looking for installment loans for bad credit, it is important to understand what bad credit is. Bad credit usually falls between 580 and 669. Anything below 579 is considered poor credit. A credit score ranges from 300 to 850. The higher the number is then the better your credit score is. The better your credit score, then the better interest rate you can get on any type of installment loan. It takes time to build up good credit, but only a few missed or late payments and your credit score begin to decline. That is not the only thing that causes your score to go down. If you have too much revolving credit, your credit score goes down. Revolving credit typically refers to credit cards. They are considered revolving credit.

When you pay off what you owe, your available balance goes up. If your debt to income ratio is too high, then your credit score also goes down. Your debt to income ratio is the amount of debt you have compared to your income.

Best Lenders for Bad Credit

You may feel like you do not have anywhere to turn because you do not think you can get approved. Have no fear, there are lenders who have installment loans for bad credit available to you.

OneMain Financial

OneMain financia logoThis is a lender that has different kinds of loans, including options that are secured and unsecured. Their loan amounts vary from $1,000 to as high as $20,000. The better your credit score then they are more willing to lend you money. They prefer to give higher personal loan amounts to those with better credit. They offer interest rates that range from 18 percent to 35.99 percent, all based on credit. They offer repayment terms of 2, 3, 4 or 5 years, so they are incredibly flexible. You can visit one of their many branch offices, or you can handle all of your business online.

Avant

Avent LoansAvant is a great choice for those with bad credit. They will give loans to those who have credit scores as low as 580. They will even approve your loan if you have a low income because they do not have income requirements. Their loans range from $2,000 up to as much as $35,000. Their loan terms are flexible at 2, 3, 4 or 5 years. They have interest rates that range from 9.95 percent to 35.99 percent. They do have an origination fee of as much as 4.75 percent of your loan amount.

There are a few more lenders that you should consider if you are interested in installment loans for bad credit. Keep in mind that there are so many lenders available to you, so you do not have to accept just any offer. Make sure that you pick the offer that is right for you and one that you can afford to pay back. While you are researching your options, be sure to consider these lenders:

Upstart

Upstart LoansIf you have a low credit score because you do not have much credit history, this is a great option for you. They are willing to loan money to those who have a credit score of 580. They do require that you have an income of at least $12,000 per year. You can borrow from $1,000 all the way up to $50,000 with terms of 3 and 5 years. The origination fee can be anywhere from 1 to 6 percent of the total loan amount. They do require you to have a debt to income ratio of less than 45 percent.

LendingClub

Another great lender for those with bad credit. LendingClub is a peer to peer lending facility. This means that individuals are loaning money to you through this site. You fill out the application and they send out your information and loan request to those they think will be willing to lend you money. The loan amounts can vary from $1,000 up to $40,000, with loan terms of three or five years. Lending Club has a high origination fee that can be anywhere between 1 to 6 percent of your loan amount. Their interest rates range from 6.95 percent to 35.89 percent. They do require that you have a credit score of at least 600. They want you to have a credit history of at least 3 years and your debt to income ratio to be under 40 percent.

Will An Installment Loan Make My Credit Worse?

The short answer is it depends completely on you. That is good and bad. It is good if you are able to begin to be responsible with your credit and make all of your payments on time. Then, slowly over time, your credit score will increase. It is bad if you cannot afford to repay the loan, or if you are not able to be responsible with your payments. There are other ways an installment loan can impact your credit score. If you do not have a long credit history, you could take out a loan to help build up your credit score.

However, you must remember to make all the payments on time. This shows that you can be responsible with your credit. Taking on an installment loan helps you to diversify the debt you have. Lenders like to see that you have a varied credit history where you have used various types of credit in a responsible manner.

Now, I want to talk about how installment loans for bad credit can hurt you. Anytime you apply for any type of credit, it causes a hard hit to your credit report. Too many of these inquiries in too short a time period are negative for your credit score. When you take on a loan, it increases the amount of debt that you have. Even if it is your only debt, it still increases your debt to income ratio. These are just some points of which you should be mindful when you take on an installment loan.

Can I Find A Loan Online?

Yes, the great news is you can find installment loans for bad credit online. There once was a time where the only online lenders were for those with bad credit. Times have changed and online lenders offer loans to those in all credit score ranges. The good thing about online lenders is you can shop around from the comfort of your home. There are many bad credit personal loan options available to you, so you do not have to accept the first loan offer you receive.

There are some major benefits to applying for a loan online. The first being that you do not actually have to talk to a human being to get your loan processed. I do not know about you, but that sounds like perfection to me. I just do not want to talk to people. I prefer to chat and text than to talk, so an online option is amazing to me. The application process is streamlined online, so it is fast and easy. I am not sure why traditional banks have not done the same thing with their applications, but they have not. Once you apply online, you typically have a response in 24 hours or less. Then, the money is usually in your bank account in 24 hours after that.

The process is simple and painless. When you apply for a loan online, you can upload any documents the lender requires right on the same website where you applied for the loan. The process could not be any easier.

Debt Consolidation Loans

Another type of installment loans for bad credit that you may want to consider is a debt consolidation loan. If your credit is bad because you have too much debt and you just do not know how to pay it off, this type of loan might be right for you. This type of loan allows you to pay off high-interest debts by combining everything into one debt. This includes debt such as medical expenses, credit cards, personal loans, and any other debt.

You determine the amount you owe to all of your creditors and you get a loan in that amount. Sometimes, the lender will issue checks directly to your creditors so you do not have to take that step. Not all lenders do that, so you may have to send them all separate checks. Hopefully, you can get an interest rate that is lower than what you are paying for all your other bills.

Be informed about dangers before you take a debt consolidation loan

Before you consider a debt consolidation loan, you must be aware of the dangers. This loan does not change the amount of money you owe. You still owe the same amount, you just owe it to one lender instead of several. If all of your debts total $15,000 and you take out a $15,000 loan, after you pay off your original debts, you still are paying back $15,000. If you use debt consolidation to pay off your credit cards, but you keep the credit cards open, you may end up using them and racking up a large amount of debt all over again. There is a theory that you should keep them all open to improve your debt to income ratio, but that leaves you open to the temptation of using them. You must be aware that this can happen.

Other Loan Options

When considering installment loans for bad credit, there may be other loans that are available to you. There are payday loans and fast cash loans. Consider these options carefully because they can be a great way to get yourself into a world of trouble. These lenders give you quick access to fast money, but it comes with a hefty price. There is a limit to how much you can borrow, usually it is a small amount. You also have to pay incredibly high interest.

If you do not repay the loan on time, you have to pay heavy fees. You usually have a short window, a few weeks to a couple of months, to repay the loan. If you do not pay back the money when it is due, you have to take out a new loan to cover the first loan and the fees. You could easily find yourself in a vicious cycle. However, if you know that you absolutely will have the money to repay the loan when it is due and you do not care about the high interest, then this might be the way to get access to the money you need right away.

A Few Items To Consider

When you are interested in installment loans for bad credit, there are some details that might help you get approved. You can ask to speak with the loan officer. Your credit history shows missed and late payments, but it does not tell the story as to why. When you talk to the loan officer, you can paint a picture and explain why things happened when they did. This may help you get approved.

You should be prepared to submit the last five years of tax returns, bank statements, and pay stubs as proof of income. You can also provide proof of any alimony or child support you receive, however, you do not have to mention it at all. You should be prepared to show proof of any dividends or payments you receive. You can write down your entire employment history to show that you have always (hopefully) been gainfully employed. You could provide a list of valuable assets.

Conclusion

There is a lot of information about installment loans for bad credit in this article. Hopefully, the information was helpful and did not put you into overload. I would like you to keep in mind that just because you are looking for installment loans for bad credit, that does not mean you should limit yourself. Make sure you find the best personal loan offer you can. Most importantly, make sure that you can afford to repay the loan that you accept. If you are not able to make the monthly payments, then you should stop looking and to not sign any paperwork. A loan is only as good as your ability to repay it. Choose wisely and make smart financial decisions.

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