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Should You Get Installment Loans for Bad Credit

Updated: Dec 27, 2021

Installment loans allow you to borrow a set amount of money you repay on a fixed schedule. While lenders offer installment loans to borrowers with imperfect credit scores, they often have better terms than other loans, like payday loans.


But sometimes, installment loans can have high-interest rates and more expensive fees, which is why it's important to know what you're getting into when taking out a loan.


Although good credit makes it easier for borrowers to get a loan, some people with lower credit scores still get better interest rates and lower fees.


What Are Installment Loans?


Installment loans are personal loans that are repaid on a fixed schedule. You should repay the loan in full by the time the loan is due or face additional fees. You can be hit with extra fees and penalties if you miss a payment.


Interest rates and fees vary depending on the borrower's credit. Installment loan rates are tied to your credit score. The higher your score, the lower your interest rate is likely to be.


Remember that an annual percentage rate that is too high can be a major red flag because it could signal that the lender is trying to hide something.


Bad credit can make installment loans more expensive. If you have bad credit, you may not be able to get a loan with a low-interest rate. The lender may not approve you to borrow the total amount you want.


How Do Installment Loans for Bad Credit Work?


By borrowing a small amount of money, you can pay off your loan faster. You can also use it to pay off other debts, like credit card balances and student loans.


Bad credit can affect your credit score, and a low credit score can make it harder to get a loan. If you have bad credit, it can be hard to borrow money from your bank because you may have a poor credit history.


On the other hand, if you have a good credit history, you may not get the loans you need. Sometimes you may need to borrow money from a payday lender, adding to your debt. However, you can use an installment loan to help pay off this debt.


How to Get Better Rates on Installment Loans with Bad Credit


Lenders use a credit report to determine your eligibility. If you have bad credit, lenders may approve you for an installment loan but make it more expensive. However, there are ways you can get the loan you want without paying more.


But borrowers who have bad credit often seek out installment loans to pay off other debts. They can use the money to pay off credit card debt, student loans, and other loans.


Before borrowing money on an installment loan, you should consider your options. You can work with a credit counselor, but you should also consider the costs of your loan.


When you get the loan, you still have to pay back the money, but you might be able to reduce the cost by making payments on time.


Conclusion


Although you can use an installment loan to pay off existing loans, you should consider your options before borrowing money. That includes talking to a credit counselor who can help you find loans that offer low-interest rates.


Parkway Finance Company provides a variety of personal loan sizes in Centerpoint, AL, to fit your needs. We will review our different options and put clients on an affordable payment plan upon approval. We do not make payday or title pawn loans, and there are no hidden fees. If you need installment loans at Centerpoint, AL, contact us today! We look forward to knowing you.

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