It is not surprising what the numbers look like for every US citizen in debt. Older and working Americans, on average, have $32,000 total personal debt, excluding home mortgages. Based on this statistic, not everyone has emergency funds.
Baby Boomers, Generation X, and Millennials follow an average percentage of having debt with 47.76%, 46.77%, and 46.72%, respectively. Even if the debts are taken out of good intentions, missing repayments becomes an issue, turning into the main reason why borrowers struggle even more. Consequently, credit history, score, and status have become a problem, further worsening the current situation.
However, there is still a solution to this problem, and that is to take advantage of installment loans for bad credit. You might be asking how taking out another loan can help you with your current debt. Read through the article as we explain how taking out an installment can be a great opportunity to save your current bad credit status.
Installment Loan Advantages For Bad Credit History
Installment loans are no different from a traditional loan. This type of loan takes a minimum of six to 36 months of repayments, which you can pay off in smaller and flexible terms. Just like how a traditional loan works, you need to follow with the stated scheduled repayments diligently. If you are wondering how taking another loan can be your saving grace, here are the reasons.
You Are Moving Away From Payday Loans
Payday loans get their name because they instantly take out your borrowed money and interest on your next payday. It may look convenient, but it is not. Payday loans have a higher average APR, making it more expensive than the traditional loan. The single repayment is the reason why many payday loan borrowers struggle to afford it. Instead, they get stuck in a miserable debt cycle.
However, taking out an installment loan for bad credit saves you from this trouble. There are various direct lenders offer installment loans for poor credit that can help you during tough times. They allow you to borrow higher loan amounts with more flexible and manageable repayment terms.
You Get Better Benefits With Installment Loans
Unlike with payday loans, you can get better benefits with installment loans. One of its best benefits is its capability of amortizing interest. In a nutshell, an amortizing interest allows you to pay both the principal amount and the accrued interest in every repayment.
Usually, installment loans are amortizing, but make sure to check with your lender if the same goes for them. With installment loans that amortize, the earlier you pay off your loan amount, the bigger money you can save due to less interest accrued. However, you should still check with your lender if they have prepayment penalties for paying off early.
You Can Get A Higher Loan Amount
The best thing about taking out an installment loan is they offer a higher loan amount compared to payday loans. Usually, payday loans allow you to borrow money not more than a hundred dollars since they are short term loans. But when it comes to installment loans, they allow you to loan up to $1,000, which is enough to cover for car repairs, medical expenses, and other emergencies.
However, it varies from state to state and lender to lender. The good thing is, you can always apply for one and find out how much you are approved with quickly, as there are many installment loans available now online.
You Have The Chance To Build Up Your Credit Score
There is no other way to help you build up your bad credit score than taking out another loan you are capable of paying off. This is when installment loans for bad credit become the solution.
Lenders that allow installment loans for bad credit give timely and accurate reports to credit bureaus. With this, they can entirely help you rebuild your credit score, as long as you are responsible for paying off the scheduled repayments.
With a lower APR compared to payday loans, installment loans give you the chance to quickly pay off your loan. A good practice for you not to miss repayments is to have an autopay scheduled. You can also enjoy the benefits and discounts offered by many lenders if you opt to set for an autopay.
Takeaway
There are many instances in our lives that we find it difficult to pay off our debts on time, resulting in a bad credit history. However, emergencies and tough situations sometimes require us to take out another loan.
Fortunately, there are installment loans for bad credit borrowers that we can resort to. These loans are more manageable, have lower APR, and offer great benefits. With diligence in paying, it can help you rebuild your credit score in no time. As long as you’re able to pay on time, you’ll have no trouble breaking the debt cycle.