Low Interest Installment Loans

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With the huge variety of loans that are available today, borrowers have access to a wide range of options. But many people are generally inclined towards rational and sensible loan terms. Today, installment loans are increasingly becoming a preferred choice of borrowing and repaying loans. Installment loans stand out because of several factors. Let’s understand the term better and look at the benefits more closely.

Amounts
$1,000 - 35,000
Loan Terms
6 months to 6 years
Credit Check Type
Soft check
Min Credit Score
580
Bad credit
Allowed
Approval rate
High approval rate
Time for decision
Average 2 minutes
Type of service
Connector
Amounts
$500 - 10,000
Loan Terms
3 months to 6 years
Credit Check Type
Soft check
Bad credit
Allowed
Approval rate
High approval rate
Time for decision
Average 2 minutes
Type of service
Connector
Amounts
$500 - 40,000
Loan Terms
2 months to 5 years
Credit Check Type
Soft or Hard
Min Credit Score
580
Bad credit
Allowed
Approval rate
High approval rate
Time for decision
Average 2 minutes
Type of service
Connector
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What is an Installment Loan?

Installment loans are any brand of loan where the borrower repays the amount at regular intervals. It’s a system where you pay back your loan in agreed-upon installments. Hence, the name – installment loans! It can be understood as a broad term because it can cover different varieties of loans, whether personal or commercial. Either way, it is widely regarded as one of the most convenient and logical forms of borrowing and repayment. Also, many lenders offer an online installment loan that you can apply for at home. With an online installment you don’t need to go to a bank or visit the lender in person.

Identifying the right kind of installment loan can be a tough task. But finding low interest installment loans may not be as tricky as you’d think. Yes, there are specific requirements you have to meet. But with the right credit history and some digging around, you can find low interest installment loans for your situation.

Here are just a few of the many benefits you get from installment loans:

  • You can make more substantial borrowings since the repayment will be made in smaller installments. It’s a good option for financing a significant expense.
  • The steady and scheduled repayments give you a comfortable pace to clear your dues. If your payments are due every month, you can accommodate the anticipated amount in your budget.
  • The repayment period is usually on a long-term basis. This allows you to slowly mobilize your finances and repay the loan over an extended period.
  • Installment loans are available for a wide variety of credit scores. You don’t need to be at the top of the credit ranking to secure an installment loan.

With the extended repayment period, you get the space and time to prioritize other expenses and finances.

Low Interest Installment Loans – The Basics

Whenever you look for low interest installment loans, one crucial part is to meet the required criteria. The requirement details for installment loans can vary slightly depending on the bank or lender. These slight variations should become clear to you once you make a casual inquiry.

However, there are specific basic requirements present in almost every loan. And you have to keep them ready for any type of loan. Most of these requirements should be with you by default. But on the off chance that you don’t have them, it would be advisable to get them at the earliest.

Legal Age

You have to be of legal age before you can legitimately apply for any loan, installment, or otherwise. The minimum age for securing a loan is 18 years. But it’s better if you are at least 21 or over because this means you have a few years of work experience.

Monthly Income

You have to present an income of at least $800 per month. But here too, a stable income of $2000 or so would work much more in your favor. A steady monthly income shows that the applicant is capable of honoring regular repayment terms.

An Active Bank Account

An essential requirement is to own a bank account with the considerable movement of resources. Having a healthy record of transactions in your account results in better credit history. Certain loans can be possible without bank accounts, but these options won’t offer you a lot of benefits.

Proof of Identity

With financial scams and thefts lurking everywhere, banks and lenders need to know who you are. An ID that establishes your identity is one of the first things lenders will request.

Proof of Income

Finally, you may have to show some evidence of the income you’re earning. Usually, this is covered if you have a pay stub from your work.

Installment Loan or Line of Credit

A lot of borrowers have conflicting ideas of whether it is better to opt for an installment loan or line of credit. When it comes to maintaining a good credit history, the type and nature of your debt also matter. Different types of debts and finances have different bearings on your credit score.

We already know how an installment loan work, but what about the line of credit loans? With the line of credit loans, you start borrowing based on an established limit. As long as you stay under this limit, you can continue borrowing. With credit cards (the most common line of credit), you have to fulfill monthly payments. If you cannot clear the balance within the due period, you pay extra charges as interest.

Impact on credit history

Before opting for one of these options, you have to be aware of how credit bureaus assess each type of debt. The interest rates from credit cards are usually higher than a personal installment loan. The Annual Percentage Rate (APR) can vary from 15-20% in terms of the national average. Because of this high rate, credit bureaus consider a line of credit as a higher risk element.

With installment loans, on the other hand, credit bureaus view it as a comparatively lower risk element. This consideration is partly because an installment loan come with a regular repayment arrangement and partly because no additional borrowing happens. This arrangement makes it a relatively more stable debt compared to a line of credit.

Low Interest Installment Loans if you have Bad Credit

Some banks and lenders are willing to offer low interest loans even if you have a low credit score. But the challenge is that these types of lenders are few and far between. This doesn’t mean it’s not possible, of course. But it implies specific requirements and a lot of digging around for potential lenders.

An installment loan for bad credit can have a variety of features. The exact terms can vary depending on the severity of your financial status and credit history. But generally, these are some standard features of a bad credit installment loan:

  • Loan amounts may range between a few hundred dollars up to several thousand dollars, depending on your credit score and loan requirement.
  • A fixed timeline is set up, within which you have to complete your repayment. The duration of this period may be shorter if your credit score is lower.
  • An interest rate is normally fixed so that it doesn’t fluctuate. But if yours is associated with a financial index, your interest rate may vary according to prevailing trends.
  • Low interest rate is always a requirement for borrowers with a low credit score. But if your lender require a better credit score, you may get higher interest rates.

Low Interest and the impact of your Credit Score

As credit bureaus asses your financial condition, they chalk up your credit capability in terms of a numerical figure. Reliable credit bureaus like FICO (Fair Isaac Corporation)furnish credit reports that are widely accepted. So, why is the credit score important? That’s because it has a direct bearing on the kind of interest you get on your loan.

Credit score and interest rates share a unique and inversely proportionate relationship. Simply put, the higher your credit score, the lower your interest rate. Regardless of the type of loan you apply for, your credit score is always a factor while working out the terms.

Credit history and credit score are ultimately expressed as a value that can range from 300 to 800. Credit bureaus use this value to present your creditworthiness. It reflects your financial decisions and actions of the past and predicts your reliability for the future. Naturally, lenders want to give a better interest rate to borrowers who have proved their fidelity with loans and finances. So, having an impressive credit score is at the center of availing low interest loans.

How to Improve your Credit Score to get a Low Interest loan

Even if you’re currently struggling with a low credit score, there are some strategies you can use to improve your score. This will eventually lead to a higher rating and, subsequently, a lower interest loan.

Timely Bill Payments

One of the sure-fire ways of getting a better credit score is to minimize your pending payments. When you clear bills on time, it reflects well in your credit history.

Substantial Credit Card Payments

If you own a credit card, keep your balance below 30% of the limit. You can make small but significant payments if your figure is going beyond this threshold.

Consolidate Your Debts

If you have multiple sources of debts accumulating, credit bureaus intently take note of these issues. In this case, you can consolidate your dues into one mobilized debt so that your credit utilization ratio is also better.

Credit Card Diversification

If you’re using only one credit card, you can also apply for a couple of more cards but keep zero balance in the new ones. This way, your available credit will increase, but your utilization ratio will appear more economical.

Summary

With an installment loan, you get a host of advantages that are comparatively better than other arrangements. From long repayment periods to diverse borrowing options, installment loans offer you bigger and better financing opportunities.

However, like any other personal loan, an installment loan also rely on your credit score. The better your credit history, the better your chances of getting low interest and benefits. Ultimately, it’s your management of money that determines the kind of advantages you get.

Quick Stats

Highest AmountLifeLoans - $40,000

Loan Terms up toQuickLoanLink - 7 years

Recommended income$2,000+ per month

Grace Chen
Article written by

Grace Chen

Grace Chen has 10 years of experience in the financial field and have been delivering excellent business content through her articles.

Grace graduated from the Haas School of Business, University of California and is currently the chief editor of Communicate Better where she has written and edited thousands of articles published in various media.