Obtaining a loan when you have good credit is not a difficult process. While it may take a few days for a bank loan to go through, most institutions are happy to lend to individuals who have good to excellent credit.
The issue arises when your credit history is less than stellar. It is in those instances where installment loans or payday loans can become useful tools for rebuilding your finances.
What are Installment Loans?
When people hear about installment loans, they usually have a negative reaction, as there is a stigma against such loans. The issue is one of misinformation and a lack of understanding, as a lot of people are not aware of how installment loans for bad credit work. Most bad credit instalment loans are readily available to anyone who has a bank account and a job, regardless of their credit score.
It means that people who have a low credit score, or no score, are still eligible to get the help they need. Another advantage is that it does not take more than a few hours for these loans to go through. It is a quick process that ensures a person has the money they need as soon as possible.
The application process for such a loan is a very simple one. You provide the institution with your details, and they determine whether you are approved. Most approvals are done instantly, as they can communicate with your bank electronically to verify your account details.
There are a few instances where manual verification may be necessary, which can take a few hours to complete. When the approval comes through, you are sent a contract that you sign and send back electronically. After all these steps are complete, the money is wired into your account.
Best Way to Use Instalment Loans
One of the trickiest aspects of rebuilding your finances is that you cannot afford to fall behind on any payments. It means that each time you have to pay a bill, rent, or a credit card installment, you must ensure that it is paid on time. What happens when you are not paid in time to pay one or two of your bills?
It is in these instances that you can turn to payday or installment loans. The loans are available for anywhere from $100 to $1000, with a modest fee payable as interest when the loan is returned.
Say you have a few bills that are due, but you are not being paid until two weeks from now. It is much better to take out a payday loan for $200 or $300, pay those bills, and then pay the loan when your income comes through.
Most people will note that interest on a payday loan is less than late fees associated with overdrafting or credit card bills. It is why installment loans are the best option in these circumstances.
Rebuilding Your Finances
The most appropriate way to use installment loans is to think of them as a last resort. It is never a good idea to rely on payday loans each month, as it is inevitably going to mean that you are constantly shuffling between paying one loan and taking out another one.
It is much better if you are only resorting to a payday loan one or two times a year, when you have unexpected expenses, or there is a delay on your paycheck coming through. Rather than falling behind on bills, incurring late fees, and seeing your credit score decline, you would take out a payday loan and resolve those debts immediately.
Payday lenders also provide greater sums to people who have a good track record of paying back their loans. If you take out one or two payday loans for $200 or $300, you would likely receive approval for up to $1000 for future payday loans.
Higher sums are helpful if you are dealing with unexpected expenses, such as a medical bill or repairs for your vehicle. Rather than skipping work for a few days because your car is out of commission, you would take out a payday loan and pay for the relevant repairs within a day.
Payday loans are not a necessary option for people with good to excellent credit, as they may have other credit avenues open to them. They are, however, very useful options for people who have low to no credit. These individuals would find it impossible to receive a short term loan through any other means. Such readily available and generous loans can help a lot of people navigate unexpected events and maintain their financial security.