When a financial emergency arises, individuals do not always have the best of options when it comes to seeking a loan. In the past, the main option people could choose in a hurry was a payday loan.
While these loans were beneficial in providing quick funds, they had to be repaid in one lump sum payment that was often difficult for borrowers. With this information, individuals will better understand why they should consider an installment loan to help them with their financial issue.
How Do Installment Loans Work?
An installment loan is one of the most convenient ways to borrow money. This type of loan can be acquired, even if a person does not have a good credit score.
With an installment loan, the payments are set up according to a borrower’s pay dates and the payment amount is the same each time so a person can carefully plan for their payments without stress. The number of payments a person will be required to make is set up according to the frequency of pay:
Those who are paid bi-weekly will pay 12 payments.
Those who are paid weekly will pay 24 payments.
Those who are paid monthly will pay six payments.
When a customer is approved for an installment loan, they will not face any penalties if they decide to pay off their loan before the due date. On the day the loan is paid off, the borrower will simply pay the amount of interest on the loan up until that day.
How Can a Borrower Qualify?
The steps to qualifying for an installment loan are fairly easy and do not cause much stress on the part of the borrower. The following must be met when applying for an installment loan:
The borrower must provide a verifiable source of income for the lender.
The borrower must have an open bank account that is in good standing.
The borrower must be at least 18 years old and a citizen of the United States.
The borrower must meet the minimum income amounts.
The borrower cannot currently be a debtor in a bankruptcy claim.