Installment loans is a general term that applies to any kind of loan that is repaid in installments. Most loans fall under this category, since it’s so common for loans to be repaid back in smaller increments than in a single bulk repayment.
An installment loan is often the most effective form of loan for a borrower, because of their convenience. Breaking a loan into smaller increments and paying it pay over an extended period of time is a significantly more affordable repayment process that places less of a financial burden on the borrower.
Personal installment loans can help an individual overcome a financial hurdle or help pay for lifestyle upgrades such as a new car or a down payment for a house. Of course, installment loan lenders do charge interest for providing these types of loans, which can even end up increasing over time, or after each installment repayment is made, but interest is virtually guaranteed to be included for loans of any type.
Bad Credit Installment Loans
People with credit problems are especially fond of taking out installment loans, as these are typically their only option for raising financial capital. Installment loan lenders who provide secured loans are typically the best way to raise cash if you need emergency money, but don’t want to risk potential long-term financial disaster from receiving extraordinarily high interest rates typically associated with unsecured loans.
Poor credit installment loans can be obtained either in person or online, regardless of a borrower’s credit score. Online loans are often the more convenient option for borrowers, especially for those individuals who have bad credit and are in dire need of quick money, because online lenders can finalize loans more quickly than in-person lenders.
Online Installment Loans
If you’re in need of some immediate financial assistance, but don’t have access to a vehicle or can’t make your way to a traditional in-person lender, you may be able to find relief via an online installment loan, which can sometimes be administered within minutes of being requested.
Additionally, if you have credit problems, then your best bet might be to seek out your loan online, since bad credit doesn’t seem to cause an issue with securing a loan from online lenders.
Just be sure to keep in mind the downsides of getting your installment loan online:
- Online loan companies typically offer substantially less money than face-to-face lenders
- You’ll have to carefully evaluate online lenders to make sure that you’re dealing with a reputable business, and not a scammer
- Online lenders tend to charge higher interest rates than traditional in-person lenders offer, mostly due to the increased risk of lending online
If you do decide to take out a loan from an online lender, make sure to carefully check the validity of the loan company before finalizing your contract with them.
Direct Lender Installment Loans
Direct lender installment loans refer to installment loans that are obtained without the help of a broker or dealer. An example of direct lenders installment loans includes certain types of student loans, where the loan is provided directly from the person or company that provided the money to the borrower.
Direct installment loan lenders can also include loans from family members and friends, who may directly lend the money to the borrower, rather than first passing it through a third party. Loans procured from direct lenders typically save borrowers money, as there are no costs required to pay for a middle-man, allowing that savings to be passed on to the borrower.
Short Term Installment Loans
People need a short term installment loan for various reasons, but common causes include losing one’s job, facing unexpected medical bills and paying for unforeseen events such as accidents or funerals. In emergencies like these, a short term installment loan can be the quickest option for raising the money that you need now.
While other types of loans can take days or even weeks to obtain approval, most short term installment loans can be approved and awarded within an hour of being requested.
The major advantage of short term installment loans is that bad credit presents virtually no problem at all, as most of the lending companies providing these types of loans don’t even require a credit check. Typical examples of short term installment loan companies include payday loans centers, cash advance operators and car title loan companies.
Examples of Short-Term Installment Loans
Payday loan centers and offices can be found in most states and cities, offering immediate loans to qualified borrowers up to the value of their next paycheck. The borrower must then pay back their loan in full by the time they receive their next paycheck, otherwise they’re met with huge interest rate hikes and the accumulation of other penalties and fees.
However, as payday loan centers often times expect that lenders won’t be able to fully pay back their loans in time, they sometimes offer substantially longer payday installment loans. These types of loans allow the borrower more time to pay back the balance of their loan, and the ability to pay it back in smaller increments, with installments varying in price.
Keep in mind though that a far higher rate of interest will be charged for these types of installments than would be charged with a regular bank loan, and only enter into a payday loan if you have no other options available, as they’ve been known to cause long-term financial problems.
Payday Loans – Pros
- Payday loan centers are located within many major towns and cities in most states, making them a fast way to get access to much needed cash.
- Payday loans are some of the easiest no credit check installment loans to acquire, since borrowers don’t have to worry about loan approvals being based on their credit score.
Payday Loans – Cons
- Payday loan offices are notorious for giving out bad deals and causing more financial damage than they prevent. Although payday loan centers provide instant access to cash, they demand extremely high interest rates and sometimes include other hidden charges as well.
- In fact, payday loans are so widely distrusted that they are illegal in 13 U.S. states. In the states where they are legal, borrowers risk having their property and general possessions being taken by the payday loan company if they fail to pay the loan back within the required timeframe, meaning you should only take out these types of loans if you’re absolutely certain you’ll be able to pay them back on time.
How to Get a Payday Loan
Payday loans can be awarded by visiting a payday loan company in person, or online. In some cases, a payday installment loan can be obtained online, but remember that online companies typically award much smaller amounts of money compared to their brick and mortar rivals.
Note that you will need to provide some form of ID, and you’ll have to fill out various forms as well as providing at least one of your recent paystubs, to prove your salary.
If you are approved for a loan, you will then be awarded a check which you can cash immediately for up to the value of your next paycheck. Just be sure to pay it off in time, otherwise you will be forced to face interest rate hikes, fees and other penalty charges.
Auto Title Loans
Auto title loans, vehicle title loans and car title loans are all names for the same type of loan – short term installment loans that use the value of your car as collateral for the loan. Auto title loans are a form of low interest secured personal loan that lets you receive up to the total value of your car, without having to sacrifice the use of it.
Like other forms of short term installment loans, car title loans can often be awarded extremely quickly (sometimes in a matter of minutes) over the phone, or even online.
If you need an installment loan for a bad credit score, auto title loans may be your best bet because they don’t usually require credit checks. Additionally, since they do include collateral that reduces a lender’s risk, they often come with lower interest rates than cash advances, payday loans, and the other types of readily available short term installment loans that are not secured with collateral.
Auto Title Loans – Pros
- Auto title loans are one of the fastest and easiest options when it comes to securing a short term installment loan. Qualified borrowers that need quick access to money can virtually always obtain an auto title loan within minutes either online or over the phone.
- Out of all the available forms of bad credit installment loans, auto title loans are probably the safest options for avoiding long term financial distress. Auto title loan companies hardly ever require a credit check, so borrowers with bad credit can still get a loan, but usually without having to pay extremely high interest rates associated with cash advances and payday loans, since these loans are secured by the value of their cars (reducing risk to the lender).
- Car title loans can be an excellent long term solution to short term liquidity problems, as long as you are able to pay off each installment by its due date.
Auto Title Loans – Cons
- If the borrower fails to make regular repayments on their loan installments, they do risk losing possession of their car. If you don’t think you can make the payments on the loan, then you are not a good candidate for taking out a vehicle title loan, because you could lose your car in the process.
How to Get an Auto Title Loan
An auto title loan is most commonly attained by calling a lender, contacting them via email, or even visiting their actual physical office. Be prepared to provide your car’s license plate number, VIN number, and to fill out some paperwork to secure your loan.
You shouldn’t have to worry about completing a credit check, but do take notice that your car will have to be inspected to make sure it’s in the same shape that you report it in, since the value of your loan is determined by the value of your vehicle.
If everything checks out and you agree to the terms of the loan, you could have the cash you need in hand within as little as 30 minutes from your first call to the lender!
Cash advances are usually awarded by credit card companies, but they can also be received by non-traditional lenders as well, either in person or online. Cash advances allow borrowers to take out a relatively small loan, typically for a short-term length, and at an extremely high interest rate.
If this is the borrower’s only option for obtaining quick cash it may be necessary, but due to the high interest rates that cash advance companies usually charge, it’s an option that should only be resorted to out of absolute need.
Like payday advances, cash advances can lead to long term financial trouble.
Cash Advances – Pros
- Cash advances are very easy to receive, as most credit card companies offer cash advances to their clients.
- Cash advances can typically be received regardless of credit scores, making them one of the many available forms of installment loans with no credit check. For people with poor credit, this makes them relatively attractive.
Cash Advances – Cons
- Cash advances typically charge extraordinarily high interest rates, so keep in mind that you will eventually end up paying significantly more back to the lender than you borrowed.
- High interest rates and short repayment periods make these one of the most expensive forms of short term loans around. Although cash advances do present a relatively quick installment loan option, the high interest rates can ultimately lead to additional financial trouble.
Long Term Installment Loans
Long term loans are actually quite different from short term loans, in that they are typically only awarded to borrowers with established credit scores who have been able to maintain proper credit, held down a steady job, and are able to provide documentation proving that they are not already in financial distress.
Long term installment loans allow borrowers a much longer time to repay their loans, often including a span of many years. Three extremely popular types of long term installment loans are mortgages, student loans and car loans.
A mortgage is a loan which is taken out to pay for some amount of a house or land that a borrower can’t pay for in full at the present time. Borrowers take on a loan to pay for the price of the asset, then immediately begin making repayments to decrease their debt in gradual installments, often over a span of many years.
Mortgages, like car title loans, are another example of collateral loans, as the property itself is used by the bank as a form of collateral to secure the debt. If the borrower defaults on their repayments, failing to live up to their end of the mortgage contract, then the lender takes possession of the property.
One of the most common forms of long term installment loans, mortgages are used by the majority of homeowners in the United States.
Mortgages – Pros:
- Mortgages allow people to purchase houses and other forms of property without having to pay for it in full upfront, which would make home ownership virtually impossible for the vast majority of Americans.
- Most homeowners will take out a mortgage at some point in their lives, so they are readily granted to those who qualify.
Mortgages – Cons:
- The longer the homeowner takes to make personal installment loans repayments, the more interest is charged on their loan, increasing the purchase price of their property. Making regular repayments can become more challenging as interest builds up.
- If the homeowner defaults on their mortgage payments, they will be forced to take out an additional mortgage and add to their original debt, sell their house to try to cover the difference that they owe, or go into foreclosure and lose the house.
- Mortgages are not easy to receive, as they typically require excellent credit scores and a great deal of paperwork and processing. These days, especially after the credit crisis and recession, it’s become harder than ever to qualify for a low interest rate mortgage.
How to Get a Mortgage
Mortgages are typically offered by traditional banks or large financial institutions that specialize in mortgage lending. The borrower will usually have to go through a series of meetings with their mortgage broker to hash out a deal and a repayment schedule, all of which can take months to finalize.
To qualify for a mortgage, borrowers almost certainly have to pass a credit check, as well as provide proof of income and a variety of other paperwork. Once everything has been processed and a mortgage is approved, the value of the loan is most commonly awarded in check form and then used to pay the housing or real estate company from which the house or property has been purchased.
With the increasing rise of tuition and an unstable economy, most modern college students are forced to take out student loans to cover their tuition costs as well as other living expenses. These loans are usually obtained from a bank or a student loan company.
Student loans can be repaid over a period of time, but after the student has graduated they are usually required to begin making monthly installment loan repayments.
Student loans are an excellent choice for long term installment loans, as they allow students to complete their education, but it should be noted that there is no way of avoiding repaying student loans, as they are no longer forgiven for those who file for bankruptcy.
Student Loans – Pros
- Student loans are the only way many students can afford to pay for their education. If it wasn’t for student loans, potentially millions of students wouldn’t be able to gain a higher education.
- Student loans are relatively easy to apply for and to receive. Education loan companies are often huge businesses and they are typically willing to approve loans to virtually anyone who applies, even to students who have established little to no credit. Since it’s impossible to discharge student loan debt via bankruptcy, lenders feel safe in offering student loan debt credit lines to just about anyone, even to borrowers who might be deemed too risky to receive mortgages or car loans.
Student Loans – Cons
- Student loans always have to be repaid in full, no matter what the circumstances are. Even if the student fails to graduate from college, declares bankruptcy and remains unemployed for years, they are still required by law to repay their student loans, as well as the interest on those loans.
- Many student loans charge high interest rates, which can make repaying loans increasingly challenging for the borrowers, especially since most borrowers are just getting out into the work world at the time that their repayments start to come due. The longer the borrower takes to repay their student loan monthly installments repayments, the most interest is gathered and the more expensive their degree has become.
How to Get a Student Loan
Student loans can also be obtained by students going directly to their bank branch or to a company that specializes in awarding student loans. Loans are usually awarded to the borrower in installments throughout the course of the student’s degree or academic program.
Car loans are used by the vast majority of Americans to help finance their new and used car purchases. Cars certainly aren’t cheap, and as a result many drivers have to take out a loan to be able to afford one, which is then paid off over a period of time.
Car loan installments typically stretch out for many months, with some running over a span of several years. Interest is charged on those loans, and interest rates typically depend on the borrower’s credit score, along with the terms of the loan, like how much was used as down payment, how long the installments are being stretched out, and other factors.
Car Loans – Pros
- Most people can’t afford to buy a car outright, so car loans make paying for a new or used car an affordable and realistic way to purchase a vehicle.
- Car loans can be repaid gradually, often over a period of several years and occasionally with extremely low interest rates (like the 0% APR financing you hear ads for on television). If you can lock in a 0% or other extremely low interest rate for your loan, that is a fantastic way to finance a large purchase.
Car Loans – Cons
- If the buyer fails to make regular car loan repayments, they face having their car repossessed, credit score adjustments and even potential bankruptcy. After having a car repossessed, buyers have basically wasted thousands of dollars paying past loan installment repayments, as well as wasting their down payment money.
- The buyer may fall on hard financial times and need to resell the car before they have finished paying off its loan. If this occurs, the car may not sell for the value of the loan that is owed, and as a result the buyer will have to pay the remaining difference.
- Car loans that are stretched out for too long a period of time, and especially at too high of an interest rate, end up to people being “under water” or “upside down”, with a loan that is more expensive than the value of their vehicle.
How to Get a Car Loan
Car loans can be obtained from a huge variety of sources, like traditional banks and credit unions, car dealerships and car company financing divisions, or from online lenders and other sources as well.
There are numerous car loan companies available online and in-person, all offering slightly different interest rates, terms and conditions. A lot of paperwork and signing will be involved in getting a car loan, so be prepared to prove your identity, have a credit check run, and fill out a variety of forms to get your loan.
Why Auto Title Loans Work
When considering taking out an installment loan, auto title loans should remain near the top of your list of potential revenue sources. Not only are car title loans one of the fastest available forms of short term financing, but they are also one of the safest.
While student loans, mortgages and car loans are excellent long term solutions to financial problems, they serve specific purposes and generally can’t be used to produce immediate cash assistance for things like rent or paying off unexpected bills.
Title loan companies award loans to people from all walks of life and rarely require credit checks, making them accessible to virtually everyone with a car. Title loans are issued based on your ability to repay the loan. What’s more, the borrower doesn’t have to give up the use of their car as they pay their loan back in installments.
Car title loans can also typically be approved extremely quickly, they require little paperwork, and the value of the loan can be delivered in cash within hours of contacting an auto title loan company.
These reasons make car title loans one of the best types of installment loans available.
About Car Capital Financial
If you decide to pursue securing a car title loan in Orange County, Los Angeles, San Diego, Riverside or anywhere else in Southern California, please call Car Capital Financial at (888) 500-9887 to discuss your options.
Car Capital Financial provides fast, hassle-free auto title loans, delivering cash to clients in as little as thirty minutes. We have provided car title loans to Southern California for over 17 years, and we look forward to hearing from you!