Online installment loans are available from companies like Maxlend Loans, making it possible for men and women with poor credit or no credit to borrow money conveniently. People are generally aware that these loans have higher interest rates than many other forms of credit. That’s because the companies are lending to borrowers who are higher-risk customers due to their low credit rating or lack of a credit score.
The companies make unsecured loans, meaning they don’t require any collateral. This is another risk factor for the lender. With pawn loans, people must provide something of value for collateral. Vehicle title loans add the lending company to the title as a lien holder.
Most companies that provide installment loans do not report payments to credit bureaus, so borrowers can’t expect to build or repair credit this way. Because the finance charges are high, using an installment loan to pay for an unnecessary purchase is inadvisable. When is it sensible to apply for one of these loans?
Useful for Emergencies
These lending products are most commonly used for emergencies by people who don’t have any sort of emergency savings. They may live paycheck to paycheck, making it nearly impossible to save even $500 over time. Others used to have an emergency fund, but had to spend it for an expensive car repair, a medical incident or replacement of a necessary appliance.
Without an installment loan option, many people would face even worse financial trouble. Not being able to get a car fixed could mean losing a job. Not being able to pay the electric bill can result in very high reconnection fees if the service is disconnected.
Making Payments as Scheduled
The customer must be certain he or she can make all the payments on time as scheduled. It’s one thing to get a loan when feeling desperate, but doing so while being unsure of the ability to make payments can lead to disaster. The lending company might ask for proof of income in the form of pay stubs or direct deposit receipts, but it doesn’t know how much debt the borrower is already carrying.