Installment Loans

What’s your financial reality?

Do you make enough money? Do you live paycheck to paycheck? How do you manage money when you do have it?

Do you have money problems? Or do you have opportunities to take control of your financial life right now by budgeting and creating a habit of making better financial decisions so you can live the life you want?

There’s no getting around it: The more money you have, the easier life can be.

And we’re not talking about sports cars, mansions, and high-end fashion. We’re talking about day-to-day life, taking care of necessities, paying bills, and providing a reasonable quality of life for yourself and your families.

According to the Federal Reserve, 76 million Americans are struggling financially and nearly half of us don’t have the necessary savings to address a $400 emergency expense.¹

When it comes to financial security, chances are, you are not where you want to be.

There are many reasons you could be struggling financially.

You may be one, or more, (or all!) of the following…

46 percent of Americans consider themselves underemployed.²
14.5 percent live beneath the poverty line.³
38 percent live paycheck to paycheck.⁴
30 percent currently have a “bad” credit score.⁵

Whatever the reason you’re struggling now, you don’t have to forever. There are many ways to get out of debt, increase your income, increase your savings, rebuild your credit and break free from living paycheck to paycheck.

And while it’s very important to understand and improve your personal finances, most of these strategies take time. Unless you win the lottery (fingers still crossed), improving your financial life won’t be like flipping a switch.

But are there actions you can take now to either speed up your financial recovery or protect yourself from further damaging your finances?

Absolutely there are!

Stay safe by avoiding payday loans

One of the easiest ways to protect the money you do have is to avoid predatory lenders and their destructive products—most notably: payday loans and title loans.

Payday and title loans may seem like a short-term solution when you’re facing an expense like an unexpected car repair or medical emergency. But payday loans and title loans are actually debt traps designed to take your dangerous financial situation and make it much, much worse. Payday and title loans can force you into a cycle of rollover—and take out huge chunks of money from your paychecks—or, even worse, cost you your car!

How dangerous are payday loans and title loans? Check out some of these staggering facts:

Four out of five payday loans are rolled over or renewed.⁶
The average payday borrower is in debt five months of the year.⁷
One in five title loan borrowers end up losing their cars!⁸

There’s a reason payday loans and title loans are called “predatory.” Avoid these loans at all costs. These predatory lenders may try to convince you that they have a short-term solution for you. But the reality is they are just trying to take advantage of the financially vulnerable.

Installment Loans

Okay, so you know to avoid predatory payday and title loans. But you still have a need for fast cash now. What do you do?

In these situations, many people will turn to credit cards, traditional bank loans, or a line of credit from a financial institution like a credit union. If you can get a low-interest personal loan from a bank, or take advantage of unused credit on a safe, traditional credit card, then those might be the solutions for you. You can probably fix that flat tire or pay this month’s rent and still be able to get by.

But if your credit score is low and your credit cards are maxed out, then what? This is a more common situation than you might think and it represents a real problem in America today. People need better access to credit. You can read more about our position on the issue in our white paper.

Now you might be asking: “If I have bad credit, low income, and a financial emergency, what can I do?”

Your safe and responsible solution could be a personal installment loan from a reputable, socially responsible lender.

What is an Installment Loan?

Installment loans are a type of loan that you repay through regular, scheduled payments. Unlike payday and title loans, they don’t require a single lump-sum payment that many borrowers can’t afford. Installment loans spread out the cost, making them a more affordable alternative for many borrowers.

How does an Installment Loan work?

Installment loans are, essentially, loans designed to be repaid over time. Payment amounts are set beforehand (or fixed) and are due at regular intervals. (If you borrow $1,000, for instance, you might pay $81 every two weeks for just over eight months.)

Compared to lump-sum payments required by payday and title loans, the regular, smaller payments that installment loans offer are more affordable and easier to manage for many borrowers.

What are the advantages of an Installment Loan?

Installment loan payments are scheduled in advance, so they’re more manageable. Also, the cost of the loan is spread over multiple payments, so they’re more affordable, too.

Oftentimes, installment loans are amortizing, which means every payment addresses a portion of both the principal and the interest. The consequence of this is that the amount you pay each month will never change, and you know precisely how much you’ll owe for each payment.

Good lenders will report your on-time payments to the credit bureaus, which can improve your credit score. In fact, one study found that six months of on-time payments reported to a credit bureau can boost your score by 35 points.⁹

What’s the difference between a safe Installment Loan and predatory loans?

The main difference between an installment loan and a predatory loan is that installment loans are actually meant to be repaid. That’s why they’re typically safer, more affordable, and can help build your credit rather than damage it.

Predatory loans—like “fast-cash” payday and title loans—are designed to be difficult to repay. They come with jaw-dropping interest rates (300 to 1,200 percent APR), and you’re only given a couple of weeks before you have to pay everything back. If you’re like many borrowers and can’t, you may find yourself tempted to “roll” the loan over. If you’re unable to repay your payday loan on time—and many borrowers can’t—you may find yourself tempted to “roll” the loan over. Rolling over a loan means you extend the life of the loan at the cost of another round of interest and fees. Rollover is so common that the average payday loan customer takes out 10.7 loans per year and accrues a total of $574 in fees alone!¹⁰

An installment loan offered by OppLoans works differently. At 99 to 199 percent APR, the cost is much lower than payday loans. Our terms are also much longer (on average 36 months), so your individual payments will be lower, too. This means they fit into people’s lives better, making it easier for you to pay back your loan while also taking care of everyday expenses.

Are Installment Loans secured?

It depends. By definition, an installment loan is any loan that’s paid back in regular installments, and some of them are secured while others are not. A home mortgage, for instance, is a secured installment loan because the borrower pledges the property as collateral. However, a personal loan that doesn’t involve collateral would not be secured.

The installment loans offered by OppLoans do not require collateral.

Where can I find an Installment Loan with no credit check?

For people with bad credit, getting a loan can be tough. Banks and other traditional lenders scrutinize your credit history, and if your credit score is too low, they’ll deny your application. There are many lenders who advertise “no credit check” loans, but be careful, because they’re not all the same.

Many payday and title lenders offer no-credit-check loans to borrowers based on nothing more than proof of employment. As great as this may sound, it typically benefits the lender much more than it benefits you. Payday and title lenders stand to profit if you miss payments. They get to charge extra interest and fees, so it’s in their interest to lend to people who they know won’t be able to make payments.

Responsible lenders, however, offer no-credit-check loans as well. Technically, they don’t check your credit—they don’t conduct a “hard” check—but their review process is very different than that of payday and title lenders. Responsible lenders will conduct a ““soft” credit check to determine your creditworthiness. By doing this, they’re less likely to approve a loan that you’ll have difficulty repaying.

If a lender asks for nothing more than a paystub before approving your loan, steer clear. Instead, find a lender, such as OppLoans, who offers no-credit-check loans but evaluates your creditworthiness through a “soft” credit check application process.

Should I look for an Installment Loan near me or get an Installment Loan online?

If you need cash fast, and you’ve decided to pursue a safe installment loan that you can actually afford to repay, it may be faster and more convenient to apply for an online installment loan rather than visiting a storefront lender.

With an online installment loan, you can have the loan principal directly deposited into your account. It may also make repayment more convenient as well.

You can find many different types of online installment loans from all kinds of lenders on the internet, but just like any other situation, there are ways to make sure you’re staying safe and finding the right product for you.

If you’re Googling “Online Installment Loans”, be aware that not all loans and lenders are the same. Shop for the right online installment loan the same way you would any other product. Compare prices (in this case, that’s the APR) and definitely read the customer reviews of the lender online on sites like Google, Facebook and LendingTree.

When you’re reviewing lenders, ask yourself: Are these installment loan borrowers actually happy with the money, service, and terms they received? Or are the customers furious with their lender and reporting them to the Better Business Bureau?

Find an online installment loan lender who has great customer reviews, a high rating on platforms like Credit Karma and LendingTree, and a high grade from the Better Business Bureau.

You’ll be glad you did your homework!

How do I get the most out of my Installment Loan?

Installment loans offer many advantages over lump-sum payday and title loans. But to get the most out of your installment loan, keep a few things in mind:

Don’t borrow more than you need. Installment loans make borrowing more affordable, and it might be tempting to apply for more money than you actually need. However, the more you borrow, the more you have to pay back. Carefully consider your financial needs and borrow only as much as necessary.
Make payments on time. Individual payments for installments are much lower than repaying a loan in a single lump sum. However, it’s still possible to fall behind if you’re not careful, so plan ahead and work your payments into your budget. Good lenders will report your on-time payments to the credit bureaus, and this will help boost your credit score.
Pay your loan back as soon as you can. Spreading out the cost of a loan over multiple payments is a good idea for many borrowers. However, with installment loans, the longer you take to repay your loan, the more you’ll pay in interest. If you’re considering an installment loan, make sure to choose a lender who doesn’t charge a prepayment penalty.

Bottom line:

Installment loans are a safer, more affordable option than lump-sum payday and title loans. They can also help you improve your credit if your lender reports on-time payments to the credit bureaus. In many cases, the safest and most affordable way to borrow money is with an installment loan.

Works Cited:

1 Worstall, Tim. “76 Million Americans Are Struggling Financially: And It Doesn’t Matter A Darn.” Forbes.com. Accessed on April 13, 2017 from https://www.forbes.com/sites/timworstall/2016/06/11/76-million-americans-are-struggling-financially-and-it-doesnt-matter-a-darn/#582f627a1a1e.

2 “The Underemployment Big Picture” Payscale.com, http://www.payscale.com/data-packages/underemployment/. Accessed 13 April 2017.

3 Gongloff, Mark. “45 Million Americans Still Stuck Below Poverty Line: Census.” HuffingtonPost.com, http://www.huffingtonpost.com/2014/09/16/poverty-household-income_n_5828974.html. Accessed 12 April 2017.

4 Gibson, Kate. “Who lives paycheck-to-paycheck? You might be surprised.” CBSnews.com. http://www.cbsnews.com/news/who-lives-paycheck-to-paycheck-you-might-be-surprised/. Accessed on 12 April 2017.

5 DiGangi, Christine. “How Many Americans Have Bad Credit?” Credit.com. http://blog.credit.com/2016/02/how-many-americans-have-bad-credit-136868/. Accessed 12 April 2017.

6 “CFPB Finds Four Out Of Five Payday Loans Are Rolled Over Or Renewed.” ConsumerFinance.gov. https://www.consumerfinance.gov/about-us/newsroom/cfpb-finds-four-out-of-five-payday-loans-are-rolled-over-or-renewed/. Accessed 12 April 2017.

7 Bourke, Nick. “Payday Lending in America: Who Borrows, Where They Borrow, and Why.” PewTrusts.org. http://www.pewtrusts.org/~/media/legacy/uploadedfiles/pcs_assets/2012/pewpaydaylendingreportpdf.pdf. Accessed 12 April 2017.

8 Sullivan, Bob. “1 in 5 Title Loan Borrowers Lose their Car, Report Finds.” Credit.com. http://blog.credit.com/2016/05/1-in-5-auto-title-loan-borrowers-have-their-vehicle-seized-144700/. Accessed 12 April 2017.

9 Chenven, Sarah. “The Power of Credit Building.” Credit Builders Alliance, http://assetfunders.org/images/pages/AFN_The_Power_of_Credit_Building.pdf. Accessed 12 April 2017.

10 “Payday Loans and Deposit Advance Products.” Consumer Financial Protection Bureau, 24 April 2013, http://files.consumerfinance.gov/f/201304_cfpb_payday-dap-whitepaper.pdf. Accessed on 12 April 2017.