What is an Installment Loan? How does an Installment Loan Work?

What is an Installment Loan? How does an Installment Loan Work?

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An installment loan is a type of consumer loan that is paid back over time on a fixed number of payments. Installment loans are generally used to build credit, consolidate other debts, or finance large purchases like an engagement ring, car, or house.

How does an Installment Loan Work?

Installment loans allow you to make big purchases, build credit, or consolidate debt using borrowed money instead of your own. With a refund term that lasts several years, the payments are comparatively small, making things like automobiles and homes affordable.

An installment loan is usually a one-time loan that provides funds in a lump amount. Lenders calculate your monthly payment so that every payment reduces your loan balance and covers your interest costs, ultimately bringing your balance to zero over the term of your loan.

Generally, the lender will let you see what your monthly payment will be before you accept the loan they offer. Additionally, personal loan lenders often provide beginning monthly payment quotes without affecting your credit score.

Types of Installment Loans

The most common types of installment loans are auto loans, student loans, Mortgages, and personal loans.

Auto loans:

Typically, this type of loan is repaid in monthly installments over a range of 12 to 96 months, although not all lenders issue loans with the same duration of monthly payments. Long-term loans often come with higher rates than short-term loans.

Student loans:

A Student loan is an installment loan used to borrow money to pay the full cost of their education.

Mortgages loans:

A mortgage is a type of installment loan used to borrow money to purchase a house. Mortgage loans are usually repaid over 15 to 30-year terms with monthly payments.

Personal Loans:

Personal loans can help if you need extra cash to consolidate debt, pay off sudden bills, finance a major purchase, or cover unexpected expenses. Normally, personal loans should be repaid within 12 to 96 months.

Pros and cons of installment loans

Installment loans offer more certainty than other forms of credit loans. Consider following the pros and cons before you apply for an installment loan.

Installment Loans Pros:

  • Installment loans are easy to obtain
  • Quick and easy application
  • Ability to finance large purchases
  • Installment loans build credit

The payment amount normally stays the same throughout the loan term options for any credit score. Typically possible to save interest charges by paying off a loan early Easy to Manage Small Installments.

Installment Loans Cons:

  • Loan fees can be high
  • You commit to depositing that much payment money into the account each month
  • Reduces your flexibility with your monthly income

So, how can I get an Installment Loan with Poor Credit? Good Question?

Even if you have a bad credit score, you may still be eligible for an installment loan. With an installment loan, you can borrow money at once and pay back it over time by fixed payments.

To find out whether to approve you for an installment loan, several lenders will consider your current debt and available income, rather than exclusively your credit history or credit score. Let’s discuss deeper into installment loans with bad credit.

What is Considered Bad Credit?

The most common credit scores range is from 300 to 850. The higher your credit score can indicate that you may be less risky to lenders. Here are common credit score ranges and their ratings.

Credit Score Rating

800-850       Exceptional
740-799        Very Good
670-739        Good
580-669        Fair
300-579        Very Poor

If your credit score is fair or very poor ranges, you may find it hard to get approved for a personal loan. This is because the lending company will likely view you as a risky borrower who may not repay the money.

However, installment loans, cash loans, and payday loans from Easy Qualify Money will not prohibit based on your credit score alone. This option allows borrowers with bad credit to be eligible to apply and maybe get a loan approval when they need money most.

What are the Requirements for an Installment Loan?

To apply for an Installment Loan, you will need to provide an active checking account, government-issued ID, proof of income, checking account, and valid ID showing you meet the minimum age requirements.

How can I choose the best installment loan?

When looking for installment loans, look for the following features:


Your interest rate determines how much your loan will finally cost you. Having a good credit score will help you be eligible for the lowest interest rates.
Loan amounts: Your loan amount may determine which lender you choose, as some lenders have loan amounts as low as $100 and others extend loans as high as $50,000 to $100,000.

Eligibility requirements:

Your credit score is one of the most significant factors in determining your eligibility for an installment loan, lenders may also look at your source of income and debt to income ratio. Meeting a lending company’s standards is the best way to get the lowest interest rates.

Repayment terms:

Most loan lenders set refund terms at 2 to 5 years, although some offer terms as high as up to 10 years. Choosing a short-term repayment will increase your monthly payments but you will get lower interest overall.

How to qualify for an installment loan

Qualifying for an installment loan may provide a short-term solution to cover emergency expenses or consolidating debt or paying off sudden expenses like medical bills. Unlike Easy Qualify Money loans, which are usually due to being paid in full on your next payday, Easy Qualify Money installment loans normally offer a longer repayment period, and sometimes you may be able to qualify for a larger loan amount than a payday or other loans.

So, how to qualify for an installment loan? Great question

At least, you will need the following to qualify for an installment loan:

Be at least 18 years old

Active Checking Account

Government Issued ID

Source of Income

Social Security Number

Working telephone number

Alternatives to an Installment Loans

Opportunely, alternatives to installment loans are available. The alternatives to installment loans we will be covering below are:

1. Title Loans
2. Peer to Peer Lending
3. Credit Unions
4. Payday Loans

If you need money now, then you need to work with skilled professionals who will make sure that your money is deposited as fast as possible. Contact Easy qualify money today or fill the form online to get started with your application process!

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