The realization that you can’t pay a bill isn’t exactly the best feeling in the world. Maybe you’re the kind of person who always pays his bills on time, and the thought of missing a due date is a foreign concept to you. Hey, you’re not alone, as many people find themselves in a similar situation.
Many things might go through your head, but know that the inability to pay your bills isn’t always a sign of irresponsible behavior. Sometimes, you simply don’t have control over changes to your cash flow.
Does this situation sound all-too-familiar? If so, learn how installment loans can help cover your bills.
What is an Installment Loan?
When you hit a rough patch financially, you may instinctively think of payday loans. These loans can help in a financial crisis, however, the terms might not be conducive to your situation. This is how an installment loan differs.
For example, if you apply for a payday loan, the lender will expect full repayment within two weeks. This works for many people, as they simply need funds to bridge the gap until the next payday. But if you’re dealing with a large expense, it might take more than two weeks to repay the loan.
An installment loan can function just like a payday loan – providing funds to cover emergency expenses such as a bill. But unlike a payday loan, you can repay an installment loan over several months.
How Much Can You Borrow?
Understand that installment loans are short-term solutions, as such, many lending companies limit how much you can borrow – typically up to $1,000.
But don’t think that you can walk into a lending company and request the maximum allowed by the lender and your state. Like any type of loan, you have to meet certain income qualifications. The application process is by far easier than applying for a bank loan. However, these lenders don’t make careless decisions.
If you apply for an installment loan to cover your bills, be ready to show a financial paper trail. It isn’t enough to state how much you earn on the application. No, these lenders want to see copies of your most recent paychecks, plus they’ll verify whether you have an active checking account.
Based on your current finances, the lending company will determine if you can borrow, and how much you can acquire.
Installment Loans and Credit Checks
Short term payday loans are historically known for their laxed credit requirements, wherein anyone can qualify regardless of credit history. You’ll be happy to know that lenders offering short-term installment loans are equally flexible.
Requirments do vary by lending company. But for the most part, credit checks aren’t part of the application process. If you can show the money, agree to the loan terms and meet the other lending requirements, you’re practically guaranteed a loan.
What you decide to do with an installment loan is your business. Use the loan to pay off your medical debt, make home repairs or catch up on your bills. But regardless of your plans for the loan, make sure you fully understand the terms, such as your interest rate, monthly payment amounts and your due dates.
These loans are helpful and convenient, as long as you use them responsibly.