Unsecured installment loans are loans that you can have that do not need any collateral. Usually, they are slightly easier in terms of paperwork than a secured loan like a mortgage. However, the amounts offered are smaller and the loan period is also shorter. Because of the fact that you don’t have to put up any collateral, lenders do find these types of loans very risky. As a result, you will find that installment loans tend to have above average interest rates.
If you have poor credit, it can be difficult to be granted a personal loan. However, there are now installment loans specifically for people with bad credit. Some of those will require a guarantor or co-signer. Others have even higher interest rates.
You can use these types of loan for any purpose. This includes:
- Paying your child’s college tuition.
- Paying for your medical bills.
- Going on vacation.
- Buying a car (although a car finance loan may then be better for you). Positive’s bad credit car loans may be a good choice.
- To pay for a wedding.
- To improve or refurbish your home (you may want to consider a secured home loan instead).
- To make a down payment on a home and have a bigger chance at getting an affordable mortgage.
- To meet expenses incurred in business.
The Advantages of an Installment Loan
There are numerous advantages to this type of loan. They include:
- People with a good credit score can easily get this type of loan at a low interest rate.
- There are also options out there for people with poor credit.
- You can use them to consolidate other debts.
- It is a quick process and you can complete it online. This means you could have your hands on your money in just a few days.
How to Apply for an Installment Loan
Because you don’t have to have collateral for this type of loan, the most important thing is your credit history. However, this doesn’t mean that you can’t apply for one of those loans if you have poor credit. However, the poorer your credit rating is, the more expensive your rates will be as well. Many lenders are now also fully online, which means you don’t even have to leave the house in order to apply for your loan.
Usually, lenders will tell you the application criteria you have to meet. As standard, they tend to be:
- That you are at least 18 (21 in some states).
- That you are in fulltime employment.
- That you have an active bank account.
- That you are a legal and permanent resident of this country.
A Word of Caution
It is important to remember that loans are serious financial commitments. If you are unable to make the repayments on a loan, you will end up in a lot of difficulty and this can negatively affect your financial situation for many years. This is why, if you are currently already in some financial difficulties and have bad credit, you may want to think about whether applying for another loan is a good idea.