Folks who are struggling to deal with their financial obligations but already have poor credit may feel as though they have very few options available to them. But there is an option they could leverage, which is an installment loan. These short term loans are available even if you have poor credit, and can get money into your bank account within hours. But how does it all work? Below is our guide that explains how these installment loans function.
The Basics of Payday and Installment Loans
Most financial institutions do not offer loans to individuals without a thorough credit and financial worthiness check. It is why installment loans online in Canada are often the only option for people who have less than stellar credit. Instead of being unable to pay your bills on time this month, you could get an installment loan from Friendly Lender and ensure that all your obligations are met in the appropriate way.
These loans do not take very long to obtain, which is why they are so appealing to most people. A five minute application is required – and there is no soft or hard credit check. All you need is a working bank account, and most payday lenders also require that you have a job. So long as you check those boxes, you are all set.
Installment Loan Terms
When you are obtaining a payday loan from a reputable lender, you are not entering into a long term arrangement. These are loans that involve modest sums of cash, as they usually range from $200 to $1000. The concept of a payday loan is to pay it back the next time you get your paycheck.
It is why most lenders offer two or three weeks as the maximum time before you must pay back the loan, with interest. Some people may find it unusual to borrow money for such a short period, but it can be the ideal loan for others’ circumstances.
Let us say that you are expecting a significant paycheck in a week, but you experience a financial emergency right now. Most employers do not offer advances, and if your credit is not good enough you may not even have a credit card with a high limit. It means that your only option is to not meet that financial emergency, or to try and get a short term loan.
Paying Back Payday Loans
Every detail regarding how you pay back a payday loan is provided in the initial contract. Lenders are very specific about the time frame for these loans, as they want to ensure the borrower is fully aware of what they are signing.
Most payday loans are due within two or three weeks of the contract date, as it is the same day you should expect the money in your bank account. Interest is high on these loans, as the lender is not doing a credit check. But given the short time frame, it only translates to a modest sum of $15 or $20 on top of the money you borrowed.
Lenders also outline the terms of what can happen if you do not pay a loan on time. Most lenders are flexible with repayments, especially if you have some unexpected hardship or circumstance. But you should ideally pay back your loan on the due date to avoid any complications.
Installment Loan Safety
It is important to practice safe financial behavior when taking out any debt. Whether you are borrowing $300 through a payday loan or putting a $1000 charge on your credit card, make sure that you have thought everything through.
Will you have enough money to pay back your loan and meet other financial obligations the next time you are paid? The last thing you want is to end up in a cycle where you are constantly taking out loans to pay back the previous ones.
Payday loans are an excellent resource for individuals who hit a financial bump. Perhaps your car broke down and needed a few hundred dollars’ worth of repairs, or you have a surprise medical bill to pay. These installment loans allow you to handle your expenses and pay bills on time.
If you are in urgent need of financial assistance, and you do not have the credit score to obtain a credit card, you may want to consider taking out an installment loan. The application process is easy and does not involve a credit check, and you should have the money wired to your bank account within a few hours.