Posted on June 5, 2020 by Nora Parks
A credit score is one of the most important factors in determining whether someone is eligible to borrow money. Whether you are looking for a personal loan, credit card, mortgage, car loan or other credit, you will need to consent to a credit inquiry. The good news is that people with lower scores can get specific online installment loans.
What are low credit installment loans?
People who have no credit score or have a lower score are still eligible for some online installment loans. These payday loans or quick cash loans come with a higher interest rate but do not require a credit check. It is possible to apply for an installment loan online with Personal Money Network and other sources.
A lender who is willing to give someone an installment loan without a credit check is taking a higher risk. This is why there are usually higher interest rates associated with these loans. Fortunately, most of these fast cash loans are short-term arrangements, where you repay the money within a few weeks. This reduces the impact of the higher APR on the loan.
When to use installment loans
If you have a lower credit score and are new to fast cash loans, you might be tempted to apply for one today. It’s an understandable desire, but it’s a better idea to understand when these loans are most useful.
A short-term loan is not designed to help you make major purchases. If you buy an item you don’t need, it’s best to buy it with the money you have. Or put the purchase on a Credit Card 0% APR.
These loans are suitable for people who are in a financial bind. Maybe you’re experiencing a backlog in your payroll or have unexpected expenses you need to manage in the coming weeks.
Getting one of these loans can get you through the next few weeks, before you get your next paycheck and pay off the loan. That’s why we always encourage people to apply for a payday loan when there’s a great need, not just when they want to buy something.
As with any loan, there are risks involved in taking out these short-term loans. It is important that you do your research on the lender and understand the terms of the loan beforehand.
Read the entire loan document sent to you before you sign it. Understand how much you are borrowing, the interest rate, when you are due to repay the loan, and the dollar amount you are expected to repay.
It’s also wise to understand your options if you’re having trouble repaying the loan on time. Some lenders are more generous in this regard than others. Make sure you know the terms, because you don’t want to create an even bigger problem for yourself.
Build your credit score
If you’re in a position where a short-term payday loan is the only way to borrow money, you may want to boost your credit score in the years to come. There are many ways to do this.
One of the first steps you can take is to apply for a secured credit card. It’s a credit card that you deposit on to get a line of credit. For example, you can apply for a card, put down a $300 deposit, and get a $500 line of credit.
Then you continue to charge purchases to the card and pay the full amount at the end of each month. As you continue to make timely payments, your credit score improves. It may take a few months, but eventually you will be in a position where you qualify for unsecured cards and other loans.
Treat a payday loan as the start of your financial journey
Don’t despair if you need to take out a payday loan to get through the next month. Most people have found themselves in a situation where they needed an urgent injection of cash. As long as you take steps to improve your financial situation, it can be a great experience for you.
The best way to ensure that you are no longer reliant on payday loans in the future is to improve your credit score, build up your savings, and ensure that you make more responsible financial decisions in the future.