Question: I'm trying to get my credit score up, but I need a small installment loan now, to help buy a new furnace. What options do I have? The bank said my credit wasn't good enough.--Joe P.
Answer: Unfortunately, emergencies don't wait for people to get everything in order before they strike. Unexpected expenses can happen at the worst times, whether it's medical bills, broken appliances, car repairs or past due bills. Short-term installment loans are available online for those with bad credit, and they're set up to get the money to individuals quickly. Traditional sources such as banks may take days for approval, though loans are cheaper from them if your credit is good enough. Online lenders, however, understand that not everyone has good credit and they're willing to work with those who need money for an emergency.
Look online for loans and check to see that they serve customers in your state. Those who offer small installment loans may also call them payday installment loans. There is usually no credit check required, at least not with the main three credit bureaus which keep track of your credit score. Lenders may view a report from Teletrack or similar agency to make sure you're not in default on any similar short-term loans. Approval is usually fast, within a few hours, and occurs all online. Some companies require you to fax documents, but searching for "no fax" or "faxless" eliminates that.
Lenders may either offer loans directly or match your information with several companies, so you have a choice of offers, can compare terms and then select the best that meets your needs. The amount that you'll be offered may vary depending on your income, but can range up to $1,000 or $2,500. The length of the loan may be a few weeks or months, up to a year or so. By law, all the costs associated with the loan, such as interest, late-payment penalties, etc., must be disclosed. You should not need to pay anything up front, until the first installment is due.
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.
Once you accept the loan, the lender deposits the money directly into your checking account, usually by the next business day. When time for repayment comes, the payments are automatically made the same way.
Online, short-term installment loans are designed to be simple to apply for. Good credit is not necessary and approval is virtually guaranteed for those who meet certain simple conditions. You should be over 18 and a U.S. resident to get a loan within the U.S. You need to have a regular income, usually for at least the last 90 days. You should have a valid checking account and an email address.
Such loans can be expensive. Seek out other sources to borrow from first, and compare the costs of different lenders. Plan to be able to pay back the loan on time, since fees add up quickly, even if the company allows you to extend the loan. If you must pay late, contact the company first to make arrangements and see the best way to minimize costs.
Online loans are really fast, and you might even be overwhelmed with offers. They're not kidding when they say guaranteed approval. The thing to do is compare the costs and choose the cheapest one. --Janus
Also, pay it back as soon as possible. If you can make installment payments that are higher than the minimum required, you can save money in interest, usually. Check the contract to be sure. --F.S.C.
What you don't want to do is get trapped with a payday loan, extending it each time by paying the fee and not paying anything on the principal. It just becomes ridiculously expensive then and you can wind up paying more in costs than what you borrowed. Some states limit how many times you can extend a loan, and that's a good thing, but you need to have a definite plan to pay it off when due. --Utah22