Learning How Online Installment Loans Work

Online installment loans are alternatives to payday loans that people with bad credit turn to when they need money for an emergency. Installment loans generally have lower interest rates and give the borrower a longer time frame to repay the money. The person who wants to borrow money fills out an application at the company’s website. If the application is approved by a company like Maxlend Loans, the cash is deposited in the customers’ checking account the next business day.

Income and Credit Rating

The amount of money a borrower qualifies for depends on income. The company may ask for proof of income or may not bother after doing a soft pull on the applicant’s credit history. This basic check does not register on the person’s credit rating.

Monetary Amounts

In general, loans range from about $250 to about $2,000. If this is the first time the person has applied with a particular company, approval may only be granted for the smallest amount. The company wants to make sure the individual is trustworthy before approving a larger sum.

Although it can be tempting to apply for a higher amount, it’s important to only ask for money that is absolutely essential to get out of the current jam. Interest rates are relatively high, and a larger amount typically takes longer to repay.

Uses

Taking out an online installment loan to pay for a vacation or some other fun use is usually an unwise idea. In contrast, using it to buy a new refrigerator may be an acceptable purpose if the individual really cannot wait to save up the money after the old one breaks down. A single person might be able to live without a refrigerator for a month or two, but a family with children probably can’t do that.

Online installment loans are becoming more common as more lending companies begin offering these alternatives to payday loans and cash advances. The arrangement makes it easier for the borrower to pay the money back over time. In addition, federal regulators have been cracking down so much on payday loans that those lending products are not as available as was true years ago.