9 Benefits of Online Installment Loans
December 17, 2019 by MoneyKey
Not every American is lucky enough to have a safety net of cash. Unexpected expenses, like car repairs, can leave you short on funds and struggling to manage bills and monthly expenses. In these situations, many people will turn to online payday loans and other cash advances, but there may be other options, such as online installment loans. Online installment loans may be an excellent option for those who need quick access to cash but cannot afford to repay the whole loan in one lump sum. Installment loans are usually repaid over an extended loan term through smaller, scheduled payments and offer three major benefits.
We’re going to take a deeper dive into what installments loans are, and how they may benefit you.
What are Installment Loans?
At its core, an installment loan is a specific amount of money you borrow from a lender which you pay back (with interest) in a series of payments that will typically fall on your payday. The amount and term of an installment loan may vary depending on a number of factors like the type of installment loan, your income, and how often you get paid (bi-weekly, monthly, etc.).
There are a number of different loans that would fall into the category of installment loans. In fact, you may already have one and don’t even know it! Things like certain auto loans, student loans, and home equity loans are considered to be installment loans.
One key feature of an installment loan versus other types of personal loans, like a line of credit, is that the interest rate is fixed, meaning it typically won’t change throughout your repayment period.
Small-dollar personal installment loans, like an online installment loans with MoneyKey, are also typically unsecured. This means that you won’t need to put any assets up as collateral.
How Do Online Installment Loans Work?
As we’ve mentioned, installment loans are different from something like a line of credit they interest rate is fixed, not revolving.
For example, let’s say you’ve applied for an installment loan and you’ve been approved for a $2,500 loan. If you finish paying off your loan and need more funds, you’ll have to apply for a new loan.
Once you’ve been approved for a loan, the funds will typically be transferred to your checking account by the lender in as soon as one business day, giving you easy and quick access to the money you need. If you apply for online installment loans, much of the entire lending process can be done online.
Benefits of Online Installment Loans
1. Manageable and Flexible Payments
Most payday loans are due in full on your next pay date without exception. This type of repayment structure can sometimes increase financial strain on a borrower. The main reason someone might get an online installment loan is the smaller, more manageable payments. Instead of the total loan amount (plus fees and interest) being due on your next pay date, installment loans are paid back over time through smaller scheduled payments.
The longer-term payment schedule often works better for people because it makes repayment more manageable and convenient. Smaller payment amounts can allow you to repay your loan and still have enough money left over to cover your other monthly expenses. Paying through installments, with the flexibility to repay early without penalties, allows you to manage loan repayment and monthly bills in a way that suits your needs.
2. Higher Loan Amount
As installment loans have longer loan terms, lenders are usually able to offer a higher loan amount. For some people, these higher loan amounts can be enough to cover costlier emergency or unexpected expenses, or help provide cash flow between pay dates. Larger loan amounts coupled with manageable payments can also reduce your risk of needing to take out multiple loans to acquire enough funds to cover an unforeseen expense.
An additional benefit to an online installment loan is speed. Online cash advances such as installment loan products are generally deposited into your bank account as soon as the next business day. This fast access to funds allows you to cover a necessary, immediate expense quickly and then gradually repay the installment loan over time in smaller, more budget-friendly amounts.
Many direct lenders offer online installment loans so you can have quick access to cash with repayment flexibility. Before you apply for an online installment loan, do some research and look for a state licensed lender like MoneyKey. Be sure to read and understand the rates and terms of your loan product fully to ensure you’re making an educated financial decision. To find out more about MoneyKey’s installment loan products, visit our Rates & Terms page.
4. Cover Unexpected Emergency Expenses
As much as you’d like to avoid them, unexpected emergencies pop up from time to time. Your car might break down, you might have a flood in your basement, or you may need to take an emergency trip to the hospital. If you don’t have enough savings to pay for these unexpected emergency expenses, personal installment loans may be able to help.
With personal online installment loans, you may be able to get the money you need to pay for that surprise medical bill or auto repair that you just can’t hold off on.
For example, let’s say your car breaks down one day and you don’t have enough in your emergency fund to get it fixed. If you don’t use your car much and can get where you need to go through public transportation, maybe you can hold off getting a repair until your next paycheck. But what if you or a family member needs the car to get to work? How much money will you be missing out on by not making your shifts? How many shifts can you afford to miss before your hours start getting cut back? In this type of situation, online installment loans may be able to get you the money you need so you can get back to work and avoid missing shifts at work.
5. Simple Application Process
If you’re looking to apply in person and get a traditional loan from the bank, the entire process can take up to a few weeks, and this process may not be as straightforward as you’d like. And what happens if the money you need is for an emergency, and you find out at the end of the few weeks that your application was denied?
With online installment loans, the application process is simple. For example, with to apply for a loan with MoneyKey, the online application process will likely only take you a few minutes to fill out, and you can fill it out 24 hours a day, 7 days a week. You won’t have to work around office hours, and you won’t need to make an appointment!
6. Options for All Credit Ratings
Even if you have poor credit, there are still online installment loans for bad credit that you can apply for. With some lenders, your credit score won’t be the primary factor they weigh when assessing you as a potential borrower. For example, to qualify for personal installment loans with MoneyKey, you must:
- Be of legal age to contract in your state
- Be a US citizen or permanent resident
- Be a resident in the state where our product is offered
- Have an active bank account
- Have a regular source of income
- Have a valid contact number and an active email address
If you’ve had some financial troubles in the past that have led to poor credit, you still may be approved for a loan if you can prove that you’ll be able to afford the repayments.
7. Online Loans are more convenient
Sometimes you need a quick injection of cash and a traditional lender may take longer than you’d desire. In such cases, an online loan would be the better option since they are generally quick. The application process itself may only take a few minutes. For example, if approved for a loan with an online company like MoneyKey, the loans funds may be deposited to your account the following business day. Admittedly, the processing times for different online financial institutions vary; however, a lot of time is saved because no back and forth trips to the physical location of the lender are required.
Today, traditional banks are concerned about the challenges facing the economy, so they are less willing to make funds as readily available as in the past. Consequently, with this reduced access to credit, borrowers are more inclined to apply for online loans where qualification criteria are generally more lenient. For instance, some online lenders are more willing to loan funds to applicants without perfect credit histories while traditional lenders often prefer to stay away from applicants with such a risk.
9. Application at Any Time of the Day
Most traditional lenders have traditional business hours. Online loan applications can be made at any time. If an unforeseen circumstance necessitates an immediate injection of short-term cash, you do not have to wait until a bank opens in the morning to start your loan application. Instead, all you need is a computer and an internet connection to apply for a loan right at that moment.
Things You Should Know About Online Installment Loans
When it comes it comes to paying off installment loans, some financial institutions will charge an early repayment fee if you try to repay your loan faster than the original installment schedule. However, some lenders, like MoneyKey, won’t charge penalize you for paying off your loan early. Either way, it’s important for you to know what your payment options are, and even if you don’t have the option of early payment, you should always be aware of the total cost of your loan. Remember that the sooner your loan has been paid off, the less interest you’ll pay in the long run.
Understand your Payments
Typically, the due dates of your payments for an installment loan are based around when you receive your income. If your bank account is going to be debited for your loan, make sure you know exactly what’s happening on your due date. You’ll want to pay special attention to instances where your due to make a payment on a weekend or holiday. If the date your income goes into your account gets shifted around for whatever reason, you’ll want to inform the lender ahead of time so you can avoid any unnecessary charges.
You should make sure you understand the cost of your loan, what your pre-payment options are, and that your payment schedule is correct to avoid paying back more than you should.
Potential Effects on Your Credit
Typically, when you apply for a loan with a bank, they’ll perform a hard inquiry into your credit to assess you as a borrower. This inquiry shows creditors that you’ve applied for credit somewhere, whether that’s for a mortgage, a credit card, a student loan, or an auto loan.
A hard inquiry may reduce your credit score from somewhere between five and ten points, so it’s be mindful of how often you apply for credit, because each inquiry will be added to your credit report. Racking up hard inquiries could potentially reduce your credit score by five to ten points each, which can start to add up.
Not all applications for credit will elicit a hard inquiry into your credit score. Some lenders will perform what’s called a soft inquiry, which is a background check that won’t show up on your credit history. When you apply for a loan with MoneyKey, we perform a soft inquiry. This means that applying for online installment loans with us won’t have any effect on your credit score.
In fact, most of our lending process won’t impact your credit history. Generally, we won’t report your loan to a credit bureau as long as it’s in good standing and you’re paying on time. The only time when we do report to a credit bureau is when a customer defaults.
When an unexpected emergency expense rears its ugly head, not everyone has the savings to handle this unforeseen expense and still mange to take care of their usual bills. When this happens, online installment loans may be what you need to help you take care of this bill and still keep up with your normal expenses.
If you need a quick influx of cash and want a straightforward and simple application process, an online installment loan might be right for you!