A credit score is one of the most important factors in determining if someone is eligible to borrow money. Whether you are seeking a personal loan, credit card, mortgage, car loan or other credit, you are going to have to consent to a credit check. The good news is that people who do have lower scores can obtain specific online installment loans.
What are Low Credit Installment Loans?
Individuals who have no credit score or a lower score are still eligible for certain 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 installment loans online with Personal Money Network and other sources.
A lender who is willing to provide an installment loan to someone without a credit check is taking on higher risk. It is why there are usually higher interest rates associated with these loans. Luckily, most of these quick cash loans are short term arrangements, where you are paying back the money within a few weeks. That cuts down on the impact of the higher APR on the loan.
When to Use Installment Loans
If you have a lower credit score and you are learning about quick cash loans for the first time, you may be tempted to apply for one today. It is an understandable desire, but it is a better idea to understand when these loans are most useful.
A short term loan is not designed to help you make big ticket purchases. If you are buying an item you do not need, it is best to do so with the money that you have. Or to put the purchase on a 0% APR credit card.
These loans are suited for people who are in a financial bind. Perhaps you are experiencing a delay in your paycheck, or you have some unexpected expenses that you must handle 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 back the loan. It is why we always encourage people to seek payday loans when there is a great need, not just when they want to buy something.
As is the case with any loan, there are risks to taking out these short term loans. It is important that you do your research on the lender, and that you understand the terms of the loan beforehand.
Read through the entire loan document that is sent to you before you sign it. Understand how much you are borrowing, the interest rate, when you have to pay back the loan, and the dollar amount you are expected to pay back.
It is also wise to understand the options available to you should you struggle to pay back the loan on time. Some lenders are more generous in this regard than others. Ensure you are aware of the terms, as you do not want to create an even bigger problem for yourself.
Building Up Your Credit Score
If you are in a position where a short term payday loan is the only way you can borrow money, you may want to boost your credit score in the coming years. There are many ways that you can go about doing this.
One of the first steps that you can take is to apply for a secured credit card. This is a credit card where you are putting down a deposit to earn a line of credit. For instance, you may apply for a card, put down a $300 deposit, and get a $500 line of credit.
Then you continue to charge purchases on 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 you will eventually be in a position where you are eligible for unsecured cards and other loans.
Treat a Payday Loan as the Start of Your Financial Journey
Do not despair if you need to take out a payday loan to make it through the next month. Most people have been in a situation where they needed an urgent injection of cash. So long as you take steps to improve your financial situation, this can be a great experience for you.
The best way to ensure that you are not depending 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.