Guaranteed Installment Loans for Bad Credit

From what we know, if you have a bad credit score, loan approvals are out of the question, no doubt. Lenders do not even think twice to offer you a loan if your credit history is below average. What to do then?

Fortunately, nowadays, there exist some reputable lenders who are ready to offer loans despite poor credit. Rather than focusing on your score, they instead review other aspects like your monthly expenses and per capita income.

This is what we recommend (2025-01-01): If you have a credit score over 580, we recommend you start your search with Lifeloans (up to $50,000). A score from 550 and lower, our recommendation is HonestLoans (up to $50,000)

If you have a credit score under 550, we recommend you try to improve your credit score.

This article is for those of you with bad credits looking for guaranteed installment loans. Keep reading to find out everything there is to learn about it and much more.

Installment Loans for Bad Credit

Installment loans for poor credit are an ideal option. It offers reasonable fixed rates of interest and efficient monthly installments built upon loan amount, terms and conditions, and Annual Percentage Rate (APR.)

If you pay the monthly payment regularly, you can evade taxing bullet payments held by other loan types like short-term payday loans. Additionally, the installment loan terms ensure flexibility, which makes them a convenient choice for customers with a poor credit history.

In general, bad credit installment loans are mostly short-term as compared to comparably structured personal loans. The term of an installment loan can be as short as 90 days or as long as seven years.

While it depends on the lenders, customers can borrow money ranging between $2,000 and $40,000. The interest and principal sum are both included in the monthly installments. This allows you to reduce the principal amount from the first day itself, gradually.

Options for Installment Loans

An installment loan comes in various types despite their very similar functioning. It includes student loans, mortgages, and auto loans.

Mortgage

A mortgage loan is a long-term loan to purchase a house. Its repayment term ranges between 15-30 years. Most of it provides a set interest rate which means that you will repay the same amount every month for the whole 30 years.

Personal Loan

A personal loan is a money borrowed for any purpose, be it covering medical debts or increasing income during emergencies. This loan type has a high interest rate as compared to mortgages or auto loans.

Are There any “Guaranteed Approval” Installment Loans for Bad Credit?

The answer is, unfortunately, a no. It is not possible to get guaranteed approval for installment loans for bad credit. The reason is because the lenders will not be able to promise to issue loans without first doing a credit check.

Every lender needs to perform a credit check prior to lending money to the borrowers. However, how detailed the check is gets determined by the lenders.

Still, you can expect a highly likely chance of getting installment loans despite bad credits. This implies that if a lender rejects your loan approval, the next one could be ready to agree and engage with you.

With that said, it is best that you look around for more, like with other loans. There are many reliable lenders or organizations that provide installment loans for bad credit. So, approach them and get to know their specific terms and conditions prior to asking for a loan.

What’s more, it is essential that your compare the repayment terms, rates of interest and loan sums of all the lenders you meet. This way, you can choose the one that best suits your specific requirements without much hassle.

Note: It is best that you go for installment loans as short as possible. This is because you will not have to spend money as much in the course of time.

Credit Checks Explained

Credit Checks come in two major kinds that the lenders can execute, i.e., a soft credit check and a hard credit check. Both credit checks give the lenders necessary details about the credit history of the customers.

However, they are different from each other, so it is crucial for you to know what sets them apart.

Soft Credit Check

Soft credit checks do not need your permission to perform. A customer’s credit score is not affected by it. Through this credit check, the lenders only get a little information and not the entire economic history of the customers.

Hard Credit Check

When it comes to hard credit checks, the lenders need your permission to perform one. A customer’s credit history takes note of all hard credit checks done on their report.

Fortunately, if you are searching for loans, each inquiry performed in 45 days is included in one hard credit check.

All in all, every lender carries out its own procedures for loan approval. And they will most probably require either a soft or hard credit check. You can only know for certain by asking the lenders ahead of time which one they use.

Requirements for Installment Loans with Bad Credit

For customers seeking loans with poor credit history, lenders require only a few requirements that can be easily met. That being said, there is a downfall to this!

The offered interest rate is relatively higher in comparison with the installment loan on offer for borrowers having an excellent credit score.

The basic requirements most lenders need for installment loans links with the age of applicants and their monthly earnings.

• Lenders need minimal monthly earnings of at least $800. However, the income per month they recommend is $2,000. Customers will need to provide verification of their income as a section of their application procedure.
• Another basic requirement is that every applicant must be above 18 years. Also, despite this being the minimum, lenders will mainly approve applications of customers who are aged 21 and above.

Things that can make it hard to secure a loan

• Defaulting on a loan can make it difficult to secure future financing. This is because lenders view borrowers who have defaulted as being high-risk, and they are often reluctant to extend new credit to these individuals. Defaulting on a loan can also lead to collection activity, which can further damage your credit score.
• Collection activity refers to when a lender contacts you in an attempt to collect on a delinquent debt. This contact may be made by phone, letter, or in person, and it can be very stressful and inconvenient. If you are facing collection activity, it is important to take steps to protect your rights. You may also want to consider contacting a consumer law attorney, who can help you understand your rights and options.

Terms and conditions to check before signing

• APR, or annual percentage rate, is the amount of interest you’ll pay on your loan each year.
• Loan fees are the one-time costs associated with taking out a loan, and may include an origination fee, processing fee, and closing costs.
• A late payment fee is charged if you make a late payment on your loan.
• The repayment schedule is the schedule of payments you’ll make to repay your loan over time.
• Collateral is an asset that can be used to secure a loan.
• The amount of the loan is the amount of money you borrow from the lender.
• Any Prepayment penalty.

Benefits and Disadvantages

Now, let us look into the advantages and disadvantages of installment loans for bad credit.

The Benefits:

• Easy to Apply
  Consumers looking for loans can easily apply for multiple online installment loans. They ensure efficient, useful and faster procedures as compared to meeting up with all the lenders individually.
  Most of the applications are automatic.Therefore, you can expect a quicker response compared to when you go through physical conversations. If your application is timed accurately, it is possible to receive your funding straight to your bank account on that day itself.
• Flexibility in Repayment Terms
  One great thing in regards to installment loans is the customers have the authority to manage their monthly payments. They can pay back in huge sums in a short period of time or in smaller sums over an extended period.This allows the customers to adjust their monthly installments according to their economic situations. It is indeed one of the best ways to start organizing your funds and integrating the debts into controllable parts. This way, the customers find it affordable to repay everything without much difficulty.
• High Loan Limit
  Because installment loans can be repaid for an extended period, lenders are ready to provide huge funding. Longer-term is quite beneficial in case you require big money quickly.Furthermore, there is no need to take various small loans. A single large loan is enough to pay off the debt. Not only that, it does not affect the credit scores as much compared to taking many smaller loans.

The Disadvantages:

• Higher Rates of Interest
  One of the major disadvantages of a bad credit installment loan is the comparatively high interest rate. They are not at the level of payday loans. Nevertheless, they are quite high, costing a massive sum of money in paying back the interest.
• Fixed Loan Money
  Once a customer gets an amount from the loan, they cannot add more. Rather, they will have to take another loan, but this will affect their credit history. If you apply for an installment loan, be sure you borrow a sufficient amount. This way, you do not have to apply for another one.

How to Improve your Credit Score?

Installment loans are certainly the best choice for consumers with a poor credit score. Nevertheless, it does no harm to bring some improvement to the scores. Even if you have a below-average credit score now, there are multiple ways you can improve it.

Below are some ways to do just that:

• Consolidate all smaller debts into one.
• Make more significant payments on your credit card.
• Pay your balance at the earliest date possible.
• Keep your loan applications to a minimum.

Customers can check their credit scores and credit history with no cost once a year through the reports the credit bureaus generate.

How Much Can I Borrow?

The amount a customer can borrow depends on the lenders. They look into a customer’s credit score, expenses, monthly wages, debt-to-income ratio and other aspects to determine the amount to lend them.

All in all, lenders provide a sum they feel the customers can pay back on time. The amount you can generally borrow ranges between $250 and $35,000.

Your debt-to-income (DTI) ratio is the percentage of your monthly income that goes toward paying your debts. To calculate your DTI, add up all of your monthly debts – including your mortgage, car loan, student loans, credit card payments, and any other recurring payments – and divide that number by your gross monthly income. For example, if you have a monthly income of $5,000 and your total monthly debts are $1,500, your DTI ratio would be 30%.

What is the Debt-to-income ratio?

Lenders use your DTI ratio to assess how much risk you pose as a borrower. A high DTI ratio indicates that you may have difficulty making your monthly payments, while a low DTI ratio suggests that you are a low-risk borrower. For most lenders, the ideal DTI ratio is below 36%. If your DTI ratio is higher than that, you may still be able to qualify for a loan, but you may need to take steps to improve your financial situation before applying.

There are a few different ways to lower your DTI ratio. One option is to increase your income by finding a better-paying job or taking on additional work. Another possibility is to pay off some of your existing debts so that they no longer contribute to your DTI calculation. Finally, you could also try to negotiate with your creditors for lower interest rates or more favorable terms. By taking one or more of these steps, you can improve your chances of getting approved for a loan and obtain more favorable terms.

Summary

An installment loan is a common loan type that features a fixed term for repaying it. They offer a wide range of benefits in comparison to other credit types. It includes setting the repayment terms as well as choosing a fixed sum of money to borrow.

Consumers with bad credit are also given the right to put in for installment loans. However, they are most likely to pay a larger interest rate to balance out the lender’s risk.