Consumer Information about Loans for People with Poor Credit
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Where can I find an installment loan that's not a payday loan?

By John Baker  

InstallmentQuestion: I need more time to pay money back. Are there short-term installment loans that aren't payday loans, so the money isn't all due when your paycheck comes, and you can pay it back over two or three months instead? The problem is that my credit isn't good enough to get a regular loan. --Allie S.

Answer:Yes, there are such loans available, and they can be a good alternative to payday loans. If you have poor credit, the cost will be higher, but borrowing money that you can pay back over time can help ease the financial burden and lower the expense somewhat.

You can expect to borrow $250 to $1000, to be paid back in installments ranging from a hundred days up to six months, with payments scheduled monthly or bi-weekly. Such loans are available online, often from the same brokers who offer payday loans as well. All the transactions can be done electronically, which can be more convenient than applying in person, allows for more privacy, and also makes it easier to shop around and compare rates.

For example, at this company, you might be able to receive a loan up to $1000, even if you have no credit history, poor credit history or a bankruptcy in your past, as long as you have a job or other source of income and a checking account.

While a $500 payday loan must be paid back with interest in two to four weeks, an installment loan of $500 might require a payment of around $100 every two weeks for three or four months.

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To qualify, most online lenders will expect you to be over 18 years old, have a job or other regular source of income, and a checking account without recent problems (no overdrafts or negative balances in the last month, for example). You'll also need an email address and access to a computer to apply for the loan. The approval process is fast, usually taking only a few minutes and the money is transferred directly electronically to your account, usually on the next business day, so there's no need to wait for it to show up in the mail.

Online lenders often don't look at your credit reports with the big three credit bureaus, or don't use the information to disqualify you, so even if you've been turned down for other bank loans or credit cards due to a low credit score, there's a good chance you'll qualify.

Here are some things to take into consideration when applying:

Is the website secure?

Lenders always need you to enter personal information on your application. When you're on the page where you'll be providing your name, bank information or Social Security number, check to see that the data will be encrypted when it's being transmitted. Look for "https" rather than "http" in the address, or a little lock icon.

Is the website following legal requirements? All lenders should disclose the APR (annual percentage rate) you'll be paying, according to federal truth in lending regulations. Before accepting an offer, look for a link to the terms or APR. More trustworthy websites also usually have a link to their privacy policy.

What are the terms?

Once you receive an offer of a loan, before agreeing, make sure you understand not only the repayment terms, but also what fees will be charged if you miss a payment. Find out if you can renew the loan at the end, in case you can't repay it, and if so, what the costs and new terms will be. Installment loans may be a slightly cheaper alternative to payday loans, but they're still not inexpensive if you have poor credit, so fees and interest may be significant.

Can you repay early?

One way to save money is by repaying a loan early. Some lenders will reduce the finance charges if you repay sooner, so if you think that will be a possibility, look at the terms when accepting a loan to see if you can save.

Does the lender serve people in my state?

Not all are licensed to do business in all states, though most online companies serve the majority of states. Their website may list the states they don't serve.

If you choose an installment loan that's not a payday loan, you'll have a little more time to pay the money back, but it's still important to borrow only for emergencies.

Comments

bankHere's another tip. Get a separate free email address from gmail or someplace, or use a secondary email account, when you apply for a loan, because you will get spam. That way it won't matter and you can keep using your main email as if nothing happened. --Mug

moneyThe best thing to do is use the money from an installment loan to pay for a short-term emergency like a car repair or something, but then start saving up money as soon as possible, so you won't have to pay loan fees in the future. Yeah, easier said than done, but it can really save money. --Jo234

symbolOnce you show a lender that you will repay on time, you can qualify for a larger loan in the future, if you need one. It's a way of building up credit. --Sim SF

dollarsSome lenders don't report to the credit bureaus, though. If they do, great, but otherwise, it won't help increase your credit score with the main credit bureaus. --Western

billsBecause fees can really start to add up if you get behind in payments, make sure you'll be able to afford each payment on time. Subtract the amount from your upcoming paycheck and pretend you'll never even see that money. Then budget with what's left, even if it means giving up some extras that you'd really rather not. Once you get the loan paid back and save up a little money ahead, you'll have even more to spend on extras in the long run. --PB76551

authorAbout the Author
John Baker comments on short-term and installment loans from the perspective of consumers who have poor credit but need money for temporary emergencies. All articles and comments on Loanwhere.com are the opinion of the authors, and we cannot guarantee the accuracy or the currency of the information. Loanwhere.com participates in affiliate advertising programs and may receive compensation for sales through links from the site. Pen-names, fictional examples and models' photos are used.

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