Installment loans are smaller loans that a person will have to pay back in installments. They are different from other small loans, such as payday loans, that are usually paid back in one sum as soon as the person who has taken out the loan gets his or her paycheck. If you have bad credit but need money, here are some reasons why you should consider seeking an installment loan, rather than another loan option.
1. You Can Actually Get an Installment Loan
People who don't have a good credit history often have a difficult time getting the money that they need for short term costs, such as car repairs or emergency room co-payments. They might turn to payday loans, which have a very high interest rate and need to be paid back all at once, or to credit cards. Credit cards are less helpful than installment loans because they are more difficult for a person with poor credit history to get and if that person is able to get one, the interest rate is going to be exorbitantly high in order to make up for the person's credit.
With an installment loan, the amount is small enough for a lender to feel comfortable giving it to a person that has a spotty credit history without charging high fees.
2. It Helps You Build Your Credit
The key feature of an installment loan is that you pay a set amount of money each month for a set number of months. By always paying off each installment on time, you show that you can handle larger amounts of money without going hopelessly into debt, boosting your credit store.
This can make your eligible for better loans in the future. For example, if you are planning to renovate your house but cannot get a loan because of your credit score, then you can get an installment loan to get you started on some of the materials, such as the materials needed to build some of the furniture for the new room that is going to be in your home. These materials are much cheaper than the cost of the entire renovation and will allow you to move forward with your goals while building credit by paying off the installment loan each month.
Once you have finished paying off your smaller installment loan, you will likely be eligible for a loan to begin your renovation project.
3. It Gets You the Money You Need Quickly
Finally, getting an installment loan is usually a very quick process, with options for installment loans even being available for application online. If you need money in a very short period of time, you will be able to get what you need quickly by using an installment loan.
For more information, talk to a company that specializes in giving out installment loans.