Payday loans, in the long term, will keep you in a cycle of bad debt. They are high interest loan products that target people with a bad credit history. Payday loans were and still remain popular for their ability to offer a quick and easy fix, which is very attractive to people without other means of accessing finance. However, the tendency of borrowers to end up seeking payday loans to clear off debt created by these loans makes them a dangerous product.
This is not the only problem potential borrowers could face with payday loans. Major payday lenders have even been forced to pay hefty damages for hidden charges and illegal withdrawals, which could increase the cost of your loan on top of already high interest payments. Instead of payday loans, more people are looking at installment loans as a viable financing option.
What do installment loans offer?
Ranging between $100 and $10,000, installment loans are financing products offered mainly by non-bank consumer credit market lenders. They are available for consumers with low credit scores and income levels who may not be able to access loans through traditional lenders such as banks. They can be either secured or unsecured, depending on the borrower’s asset capacity. Unsecured loans usually attract heavier terms than secured loans.
These loans target the same demographics as payday loans, but are often a safer and less costly alternative. They generally feature more affordable payments every month, usually amounting to 5% on average. You will not need to take a second installment loan to afford your monthly expenditure because their cost can easily be met. The loans also attract a convenient time period of repayment and can be adjusted for quicker clearance.
Are installment loans safe?
Even if you have bad credit, finding an installment loan from a credible lender could be a safe and viable option for your financing needs. The high cost of payday loans can be attributed to the extremely malicious nature of lenders, a risk which still remains with installment loans. But how can you find the right lender? Here are some things to consider.
Efficient customer service is a hallmark attribute for good lenders. Only trust lenders from whom you can access help and information at all times throughout the pre-approval process. Make sure to check whether they are licensed to operate in the country, as well as the minimum credit score they require for borrowers to be able to apply. These markers will suggest that your lender is reliable. Any lenders who require that you pay fees upfront fees to access services should be flagged and avoided immediately.
Finding a reliable lender who also offers bonuses and flexible loan fees could improve your financing options and allow you to take up your loan at even lower costs. By researching the lender before taking a loan, you will be able to protect yourself from potentially significant and cyclic debt.
The soft inquiries made on your credit history during the process of acquisition of installment loans will not affect your score at all.