Taking out any loan is a big decision. Whether you’re opening a new credit card, applying for an auto loan, or applying for installment loans, they all take thorough consideration. Spending the extra time learning what to expect could help you avoid scams and predatory lending. Which will save you a lot of money in the long run.
The first step in your search for the right installment loan is to understand different types of lenders. A direct lender is probably what you’re looking for, as they will likely provide the most straightforward loan process.
A direct lender is a bank, loan company, or financial institution that provides loans directly to customers. As opposed to a broker, or middleman, that brings lenders and customers together. There are plenty of good direct lenders for installment loans, but make sure you research on multiple types of loans that you’re considering.
The Application, Funding, and Loan Process
Applying for installment loans can be a quick and easy process—like with CreditNinja—or a time-consuming hassle. It will all depend on the lender and their application process. Here’s the general process for most installment lenders:
- You fill out the application. Some lenders offer online applications, while others still operate out of storefront locations and may need you to apply in person. Regardless, the application will require a decent amount of personal information from you, such as full name, address, phone number, financial information to verify your income and bank account, and more.
- Once you’ve filled out the application, the lender will review your information and decide whether or not you qualify for a loan. You’ll then receive a decision as to whether you’re approved or not.
- If approved, the lender will tell you how much you qualify for, the interest rate, APR, repayment terms, and conditions. This is a very important step, as you’ll need to review this information thoroughly to make sure you can afford the loan.
- If you agree to the terms and conditions you’ll sign the contract. Once the contract is signed the deal is done, so make sure you’re 100% confident you can repay the loan.
- The lender will then provide you with the loan. CreditNinja uses direct deposit to transfer the funds right into your bank account.
- You’ll begin to repay the loan, through monthly installments, on the agreed-upon date in the contract.
- Once you’ve paid the loan off completely the process is complete. Keep in mind that on-time payments will help you avoid additional fees and charges.
What to Watch Out for When Applying
Unfortunately, there are many lenders out there that try to take advantage of borrowers in need. Luckily, there are several tell-tale signs of shady lenders:
- Extremely high interest rates
- Very short repayment periods
- Excessive fees and charges
- Fees for paying off the loan early
- Confusing or misleading terms
These are just a few things to keep an eye on when applying for a new loan. Here are a couple more practices to watch out for:
Online Installment Loans No Credit Check
A credit check is an important part of any loan application process. Lenders need to review your credit history to see how trustworthy you are when borrowing. Lower credit scores tell them that you may not make payments on time, or at all.
There are a couple types of credit checks that lenders can perform: hard credit checks and soft credit checks. A hard check will show up on your credit report and may impact your score negatively if you have a lot of them. A soft check on the other hand won’t affect your credit score but still allows the lender to see your borrowing history.
The thing to watch out for is if a borrower offers installment loans with “no credit check.” If they don’t check your credit then they aren’t very concerned about whether you’ll pay them back. And if they don’t care about that, then they may be hoping to trap borrowers into cycles of debt. This is because not making payments will add more fees and interest in the long run.
Guaranteed Approval for Bad Credit
This is another thing to keep an eye out for when applying for installment loans. No credible lender will guarantee you’ll be approved before you apply. Because how could they know whether you can afford the loan and make payments before getting all of your information?
Credible lenders will review all of your financial information, bank accounts, credit score, and past borrowing habits to make sure you’re a good match for their loans. The general rule of thumb is that a lender who doesn’t care whether you can repay a loan isn’t a lender you want to work with.